When Shareholders Speak: The Crompton and Butterfly Case

Shareholders play a vital role in the governance and decision-making processes of a company. Empowered shareholders can influence corporate policies, drive ethical practices, and contribute to long-term sustainability. Among these examples is the case of Crompton Greaves Consumer Electricals Limited (Crompton) and Butterfly Gandhimathi Appliances Limited. This real-life scenario showcases how shareholders played a pivotal role in shaping the corporate landscape.

Empowering Shareholders 

Empowering shareholders means giving them the tools and influence necessary to affect the direction of the company they have invested in. This empowerment can be achieved through various means, including voting rights, shareholder activism, and engaging in corporate governance practices. By doing so, shareholders become more than just investors; they become active participants in the companies they support.

Crompton Greaves Consumer Electricals Limited – Shareholder Influence in Action: 

In a real-life example of shareholder empowerment, Crompton Greaves Consumer Electricals Limited (Crompton) and Butterfly Gandhimathi Appliances Limited were on the verge of a merger. The success of this Scheme of Amalgamation depended on securing shareholder and creditor approvals. The public shareholders of Butterfly did not support the merger. As per SEBI regulations, the Scheme couldn’t proceed without unanimous approval. This case underscores the significant influence shareholders wield in corporate decisions and the importance of considering all voices in crucial strategic choices, ultimately shaping the trajectory of businesses and their stakeholders.

ExxonMobil and Climate Activism:

ExxonMobil, one of the world’s largest oil and gas companies, faced increasing pressure from shareholders concerned about climate change. Shareholders, including pension funds and institutional investors, began pushing the company to address environmental and social risks associated with its operations.

In 2017, shareholders successfully passed a resolution requiring ExxonMobil to report on the impact of climate change on its business. This victory marked a turning point in the company’s stance on climate issues. ExxonMobil was compelled to take climate change more seriously and adapt its strategies to a rapidly evolving energy landscape.

Vanguard and BlackRock force Exxon to factor Climate change into the business model.

Starbucks and Ethical Sourcing:

Starbucks, the global coffee giant, faced shareholder pressure to improve its ethical sourcing practices. Shareholders, including socially responsible investment funds, urged the company to take stronger steps in ensuring fair treatment of coffee farmers and more sustainable coffee production.

In response to this pressure, Starbucks pledged to ethically source 100% of its coffee by 2015. It worked towards improving the livelihoods of coffee farmers and ensuring the environmental sustainability of coffee production. Shareholder activism played a crucial role in making Starbucks a leader in responsible sourcing and supporting coffee farming communities.

Facebook and Data Privacy:

Facebook, the social media giant, faced significant shareholder concerns over data privacy and the mishandling of user data. Shareholders, including pension funds and individual investors, sought to hold the company accountable for its data privacy practices.

In 2019, these efforts culminated in shareholder resolutions and public scrutiny, pushing Facebook to strengthen its commitment to user data privacy. The company introduced measures to provide users with more control over their data and to enhance transparency in data handling practices.

Conclusion

Empowering shareholders is essential for ensuring corporate accountability, ethical business practices, and sustainability. The real-life examples of ExxonMobil, Starbucks, Facebook and Butterfly demonstrate the power of shareholders to effect change in the companies they invest in. As a shareholder, you have a voice in how a company operates and the impact it has on society and the environment.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.