Nicole Martens, Executive Director at Just Share

Shareholder activism is often framed as a problem for boards to manage. Companies speak of “dealing with” activists. Directors prepare for difficult annual general meetings. Communications teams brace for uncomfortable headlines.

That is the wrong way to think about it.

Every well-functioning system depends on feedback. Pilots rely on cockpit instruments. Doctors rely on symptoms. Businesses rely on financial results. Boards are no different. They depend on a range of feedback mechanisms – from management, internal audit, external assurance, regulators and shareholders – to understand whether strategy is working, risks are emerging and decisions are creating long-term value.

The purpose of feedback is not to make us comfortable. It is to help us see what we might otherwise miss.

Viewed through that lens, shareholder activism looks rather different. It is not simply a challenge to management authority or board decision-making. It is one of the ways governance does its work.

That does not mean activists are always right. Nor does it mean boards should support every shareholder proposal that lands on the agenda. Good governance requires judgement, and reasonable people will disagree about the best way forward.

What activism does provide, however, is an opportunity. It raises questions that boards should at least be prepared to ask themselves.

After years of engaging with listed companies, institutional investors and fellow shareholders, one pattern has become difficult to ignore. The same governance questions surface repeatedly, regardless of sector.

The issue may be climate change, executive remuneration, stewardship or transformation. The underlying challenge is often remarkably similar.

Is the company’s strategy genuinely reflected in its decisions?

Are public commitments matched by measurable action?

Who is accountable for delivery?

And is the board receiving the information it needs to test its own assumptions?

These are governance questions before they are climate questions, social questions or investor relations questions.

Take climate change.

Much of the debate has moved beyond whether companies recognise climate risk. Many now publish detailed climate strategies, commit to net zero targets and describe sophisticated governance processes. Yet questions remain about whether capital allocation decisions, financing choices and investment priorities consistently reflect those commitments.

That is not primarily a climate problem. It is a governance question about strategic alignment.

The same applies to responsible investment.

Asset managers increasingly speak about stewardship, long-term value creation and active ownership. But stewardship is not defined by policy statements alone. It is demonstrated through engagement and voting behaviour. Where those actions fail to reflect stated principles, the issue is not simply one of communication. It is one of governance and accountability.

Transformation offers another example.

South African companies have spent years developing diversity policies, setting targets and reporting progress. Yet leadership transformation remains frustratingly slow across much of corporate South Africa.

Again, this is more than a compliance issue. It raises questions about accountability, incentives and board oversight. If transformation is genuinely strategic, who owns delivery? How is progress measured? What happens when targets are consistently missed?

Across each of these issues, the specific subject matter changes. The governance questions do not.

Perhaps the most important lesson is that governance failures rarely emerge without warning.

Corporate crises often appear to erupt suddenly. Reputations unravel. Investor confidence weakens. Regulators intervene. Trust evaporates.

But those moments are usually the end of a much longer story.

There were warning signs.

There were uncomfortable questions.

There were concerns raised by employees, investors, customers or shareholders.

Too often, the problem was not a lack of information. It was a failure to recognise the significance of the information that already existed.

This should not surprise us.

Directors are human. Like all decision-makers, boards are susceptible to confirmation bias, groupthink and the natural tendency to seek evidence that supports existing beliefs. Governance structures exist precisely because no individual, however experienced, is free from those biases.

Independent directors, board committees, internal audit, external assurance and shareholder engagement all serve the same purpose. They reduce blind spots. They create opportunities to challenge assumptions before those assumptions become costly mistakes.

Shareholder activism should be understood in exactly the same way.

When shareholders repeatedly raise concerns, the most useful question is not, “How do we respond to these activists?”

It is, “What might this feedback be telling us?”

That shift in perspective is a game changer.

It encourages curiosity instead of defensiveness.

It invites boards to examine whether their strategy is genuinely influencing decisions, whether accountability is sufficiently clear and whether disclosure reflects reality rather than aspiration.

Most importantly, it recognises that good governance is not demonstrated when everyone agrees. It is demonstrated by how boards respond when they are challenged.

The strongest boards are not those that never face criticism. They are the ones that remain curious enough to ask whether criticism contains something worth learning.

Strong governance has consequences that extend far beyond the boardroom. It shapes how companies allocate capital, prepare for emerging risks, build leadership pipelines and earn the trust of investors, employees and society. In an increasingly complex operating environment, those outcomes matter more than ever.

Shareholder activism is likely to remain a feature of corporate South Africa for years to come. Boards can treat it as an unwelcome disruption, or they can recognise it for what it often is: one more source of governance intelligence.

The question is not whether boards should agree with every activist.

The question is whether they are listening.

ENDS