Influence without Activism: Green Investors and Corporate Emissions
Key Finding
Companies reduced their greenhouse gas emissions when stock ownership by green funds increased and did not alter their emissions when ownership by nongreen funds changed.
Abstract
Do firms adjust their policies based on shareholder preferences? Using variation in ownership by environmentally oriented public pension funds, we find that firms reduce carbon emissions when green ownership increases. We find no evidence that ownership by green investors is associated with increased shareholder activism through shareholder proposals or anti-director voting. These findings suggest that managers may attempt to align corporate social policies with shareholder preferences, even without traditional shareholder activism. The findings also suggest that divestment of fossil fuel stocks may result in companies polluting more than if green investors had held those stocks instead.
© Matthew E. Kahn, John G. Matsusaka, Chong Shu, 2024
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