Institutional investors: at the crossroads of intermediation and corporate governance

Institutional investors have always stood at the intersection of intermediation and corporate governance. As increasingly regulated entities, they are imbued with a public interest, to a greater or lesser degree, and more recently have been of systemic importance on a global scale. As shareholders, on the other hand, institutional investors are private actors, a vital participant in the corporation’s internal life - at least in theory. But the tumult and upheaval in the world of finance over the past number of years has altered the environment inhabited by institutional investors and the dynamics of the forces impacting them. The ‘rational reticence’ of institutional investors has been giving way to ‘active engagement’ in some surprising quarters and ESG (environmental, social and governance) investing indicates that public interest considerations may be seeping into private sector investment activities.