Corporate law, pension law and the transformative potential of pension fund investment activism

Pension funds, the funds held in trust to support occupational pension plans, represent significant funds of capital. Together with other institutional investors such as mutual funds and hedge funds they have become important actors in financial markets - nationally and internationally. They have significant holdings in national and transnational corporations. They are also deeply implicated in the financial instability of global financial markets, and free market globalization.

In the past decade some members of the labour movement have sought to have more active involvement in pension fund investment decision-making. They have seen this involvement as a strategy for influencing corporate management and practice, and for encouraging productivity, local and regional development and long-term growth and sustainability. More radically, they have seen it as a means to create new conceptions of ''value" that include factors other than monetary return, and to transform capital by gaining greater social and democratic control over it. They have pursued strategies such as advocating for greater representation on pension plan boards of trustees or investment advisory committees, shareholder activism including proxy voting, investment screening and economically targeted or community investing.

This thesis assesses these strategies within the Canadian context and looks at their transformative potential in light of pension law and corporate law principles and practice. It argues that the current strategies of pension fund activists, even if extended to other types of investors - individuals and institutional - are not likely to lead to more democratic and social systems of corporate regulation. It also suggests that pension fund activists have not fully explored the possibilities created by the fact that pension funds have many ''owners" and "beneficiaries" - legal or otherwise. Nor have their strategies adequately considered the suggestion that the uncertainties of corporate law make completing the separation of the corporation from the shareholder, and creating democratic and social systems of corporate regulation, a more appropriate and meaningful political project. In short, they have not challenged the limitations of pension law and corporate law with strategies that recognize the corporation and markets as social institutions that should be democratically and socially regulated. One avenue for doing this appears to be through utilizing the public pension system, particularly by expanding a funded public pension system, and democratizing the fund investment decision-making process.