Can Shareholder Activism be a Virtuous Practice?

Shareholder activism is considered one of the most promising tools for fostering changes in corporate behaviour towards more responsible and sustainable business models, yet moving financial and economic markets towards more virtuous practices is a challenge in the face of complex ESG (Environmental, Social and Governance) problems with which societies are struggling all around the world. This paper contributes to this vibrant debate with the perspective of virtue ethics. In particular, the paper discusses whether and to what extent shareholder activism could be considered a virtuous practice. By analysing three different types of shareholder activism (financial shareholder activism, socially responsible shareholder activism and advocacy shareholder activism) the paper emphasises what possibilities this activity has, and the challenges it needs to face, if it is to develop as a virtuous practice. Indeed, adopting a MacIntyrean approach to virtue ethics, we focus on goods achieved in the specific context of a practice and their related standards of excellence. Specifically, virtue ethics can help to unmask the inversion of external over internal goods and the opposition between true and apparent goods, avoiding, in this way, that a virtuous practice could become a vicious one. We emphasise the need for: sharing a concept of ‘good’ and related standards of excellence; having or acquiring virtues; and practising them. Our suggestions could have implications in terms of future research but also as advice to policy makers and practitioners to increase the efficacy of their actions.