Canada ranks second only to the United States as a market facing the prospect of increased shareholder activism, followed by Australia and the United Kingdom, according to new research from FTI Consulting Inc., which publishes an index to track the threat of shareholder activism by country.

“These countries have experienced changing economic factors, including a strong U.S. dollar, undervalued asset prices and increased global scrutiny of corporate governance standards,” FTI’s report says.

“With a regulatory environment that is viewed as more activist-friendly than the U.S., Canada is the second most likely jurisdiction for activism and has increasingly attracted investments from its southern neighbor,” the report says. “The country largely boasts investment opportunities within the mining and energy sectors and, as such, has seen environmental activism increase significantly over the past few years.”

Pension funds in Canada are also becoming increasingly involved in corporate governance and say-on-pay proposals, the report adds. Furthermore, “the recent movement to support gender diversity has also resulted in increased awareness of female representation on boards of directors.”

Overall, the most likely focus for shareholder activists in North America is to push for board representation, the report says: “Activists are keeping a close eye on commodity prices to determine when to invest in energy and materials companies located in resource-rich North America. New technology has disrupted these markets, but we expect activists to begin bargain hunting for strategic sales and/or spinoffs.”

Shareholder activism is also on the rise in Asia, the FTI report says, as markets such as South Korea and Japan saw landmark shareholder activism campaigns in 2016. “Investors likely will continue to exert their influence in this region as they become more comfortable with this environment.”

“The success of shareholder activism in North America continues to fuel its spread across the globe,” says Steven Balet, managing director and head of corporate governance and activist engagement at FTI Consulting, in a statement. “These global shareholder activists are not necessarily U.S.-based nor do they necessarily conduct their activism in the U.S. style. They have, however, been increasingly successful in many jurisdictions across Europe, the U.K. and Asia.”

Photo copyright: polygraphus/123RF