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07 June 2021

Activists must be 'multifaceted and relentless' in bid to clean-up commodity trade

A new wave of shareholder activism that is aiming to curb the ecological harms caused by multinational corporations like ExxonMobil and Royal Dutch Shell is unlikely to affect commodity trading firms without a shift to a more dynamic approach, according to new research.

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Activist investors and shareholders are bringing about changes to multinational firms.

Forcing change at the top of commodity trading firms is likely to require more than just financial pressure, with a more “multifaceted and relentless” approach needed to address the social and ecological harms being carried out by firms trading in resources like coffee, sugar, palm oil, and precious metals.

The findings are revealed in the paper, ‘Commodity traders in a storm: financialization, corporate power and ecological crisis’ published by Dr Joseph Baines, from the Department of European and International Studies at King’s College London, and Dr Sandy Hager, from City, University of London.

The research, published in the Review of International Political Economy, comes as activist investors at oil and gas firm ExxonMobil won three seats on the board in an effort to clean up its activities, while Royal Dutch Shell was ordered by a court to cut its emissions after a case was brought against it by a group of 17,000 Dutch citizens.

Just as the commodity trading firms are protean and inexhaustibly dynamic in their business practices, so too must our efforts to check their power be multifaceted and relentless. The future of the planet may depend on it

Dr Joseph Baines and Dr Sandy Hager

But similar measures are unlikely to impact commodity trading firms, the academics say, because of the predominance of private ownership in the sector, the weakness of debt divestment threats, and the increased use of ‘shadow banking’ by some big traders.

The researchers also found “little evidence” from shareholder voting data that the major asset management companies were pushing commodity traders to improve environmental and social governance.

The academics note: “Our intention is not to dismiss the efforts of activist investors to address problems relating to the commodity trading firms. Attempts at mobilising pressures within financial channels should and must expand.

“But we submit that these efforts ought to be complemented with other forms of mobilisation that extend beyond financial activism to encompass direct support for indigenous protest movements, pipeline blockades, consumer advocacy campaigns, electoral coalition-building, labour organising, and all manner of other activities.

“Just as the commodity trading firms are protean and inexhaustibly dynamic in their business practices, so too must our efforts to check their power be multifaceted and relentless. The future of the planet may depend on it.”

You can read the paper in full here. You can read more on commodity trading firms from Dr Baines and Dr Hager here.

In this story

Baines-Joseph160

Senior Lecturer in International Political Economy