Global report confirms overall slowdown in activist activity

5 minute read 26.07.2023 Kate Hilder, Siobhan Doherty

Insightia has released its latest statistical analysis of global trends in shareholder activist activity for H1 2023. Our key takeaways are below.

Key takeouts

The global report found that the overall level of activist activity for H1 2023 was down on the same period last year (though some regions defied the overall slowdown)
Activist activity continues to be highest (by far) in the US, followed by Japan. Australia ranks sixth overall in terms of activist activity
Globally, the number of companies publicly subjected to environmental and social (E&S) demands remained high. In the US, the number of companies publicly subjected to specifically ‘climate change & GHG emissions’ demands increased 22% on H1 2022
In Australia, fewer companies were publicly subjected to activist demands in H1 2022 compared with the same period last year. The number of Australian companies targeted with environmental demands was slightly up on last year.

Below is a short overview of some of the key findings in the report, read the full text, Shareholder Activism in H1 2023.

According to the report, 721 companies globally were publicly subjected to activist demands in H1 2023 (down from 730 in H1 2022). For context, this is well down on pre-pandemic levels – in H1 2019, 768 companies globally were publicly subjected to activist demands.
However, the report also reveals that the H1 2023 slowdown was not even across regions. For example, while activity dropped to a recent low in Europe (with just 85 companies targeted down from 102 in H1 2022), activity remained steady in Japan, increased slightly in Canada and spiked in the Republic of Korea.

According to the report, levels of activity continue to be highest in the US where 403 companies were targeted in H1 2023 (vs 406 in H1 2022).

The next most active regions were:
- Japan (89 companies targeted – consistent with H1 2022)
- Republic of Korea (60 companies targeted, up from 41 in H1 2022)
- Canada (40 companies targeted, up from 37 companies in H1 2022)
- the UK (25 companies targeted, down from 28 in H1 2022)
- Australia (23 companies targeted, down from 27 in H1 2022).
Activity was found to be lowest in Brazil, India, Hong Kong, Puerto Rico, Norway, Taiwan, Austria, Bermuda, Belgium, Russian Federation and Luxembourg (all had only two companies targeted during the H1 2023 period)
Sectors most targeted
Globally, and consistent with H1 2022, more companies in the industrials sector were targeted than any other (16% of the total number of companies publicly subjected to activist demands were companies in this sector).
The next most targeted sectors were: consumer cyclical (15%) and financial services (13%).
The report also there was a sharp fall in the number of technology companies targeted: 97 companies in H2 2022 vs 82 companies in H1 2023.

Consistent with previous years, large cap companies continue to be the most targeted (accounting for 40% of the total number of companies publicly subjected to activist demands during the H1 2023 period).

According to the report, during H1 2023, the number of companies publicly subjected to activist E&S demands increased substantially:
- 115 companies were publicly subjected to ‘environmental’ demands (up from 129 in H1 2022 and 93 in H1 2021)
- 144 companies were publicly subjected to ‘social’ demands (up from 129 in H1 2022)
Fewer companies were targeted with ‘governance’ demands - 327 companies were publicly subjected to ‘governance’ demands (down from 334 in H1 2022)
The number of companies publicly subjected to activist M&A demands fell from 46 in H1 2022 to 38 in H1 2023
US-specific findings
Fewer US-based companies were publicly subjected to activist demands in H1 2023 than in the same period last year – according to the report 403 companies were publicly subjected to activist demands in H1 2023 vs 406 in H1 2022. For context, this is still down on the level of activity for any year in the 2017-2019 period.
The consumer cyclical and industrials sectors were the most targeted.

According to the report, 394 US-based companies were publicly targeted by ESG-related demands in H1 2023 (up from 382 in H1 2022).
Notably, the report reveals that this increase was driven by an uptick in the environmental and social demands (and a corresponding drop in governance demands):
- 73 US-based companies were targeted with environmental demands in H1 2023 (vs 64 in H1 2022)
- 120 US-based companies were targeted with social demands in H1 2023 (vs 96 in H1 2022)
- 201 companies were targeted with governance demands in H1 2023 (vs 222 in H1 2022)
Demand type:
- In the ‘environmental’ category, greenhouse gas (GHG) emissions reduction/climate-related demands were the most common
- In the ‘social’ category, diversity/equality related demands were the most common
- In the ‘governance’ category, calls to amend company policy were the most common, followed by board-independence demands

Fewer Australia-based companies were publicly subjected to activist demands in H1 2023 compared with the same period last year - 23 Australia based companies in H1 2023 vs 27 in H1 2022. For context, this is substantially down on 2019 levels (40 companies were targeted during H1 2019).
Consistent with previous years, the basic materials sector continues to be the most targeted sector (accounting for 35% of the total number of companies targeted during the period)
The next most targeted sector (accounting for 30% of Australia-based companies targeted in the period) was financial services – double the number targeted in the same period in 2022.
Consistent with previous years, the most common demand type in H1 2023 were demands to appoint or remove personnel
The number of Australia-based companies targeted with environmental demands remained steady:
- Six companies faced environmental demands in H1 2023 (consistent with H1 2022)
- Interestingly, the report found that unlike last year, not all demands concerned GHG emissions/climate change - this year, the majority of demands (five of seven) concern waste and pollution.
Activists have so far secured 12 board seats (down from a record 18 in H1 2021). Interestingly, 11 of 12 were secured through a contested vote (rather than settlements) - last year, seven of 11 seats were secured through settlements.