The Expanded Role of Investor Relations: Socially Responsible Investing, Shareholder Activism, and Organizational Legitimacy

Investors increasingly use ownership rights to influence a corporation’s corporate social responsibility (CSR) practices and policies, challenging the traditional role of investor relations. However, shareholder activism with respect to CSR has thus far not received any scholarly attention in the field of strategic communication. This multidisciplinary study examines shareholder activism as a drive for change in CSR behavior. Using a case study approach, the study analyzes a shareholder resolution sponsored by NYC Public Pension Funds that resulted in an engagement process with CONSOL Energy Inc. regarding environmental responsibility. As a result of the engagement process, the company implemented a series of proactive procedural and structural changes. These findings suggest that reactive responses to societal demands of shareholders can elicit more proactive measures in CSR behavior that the target company would not have enacted otherwise. Consequently, the paper argues that an expanded role of investor relations pushes corporations to meet or even exceed societal expectations of a broader set of stakeholders. This change in practice ensures that corporations are committed to conducting socially desired actions in return for legitimacy in society.