Can investor coalitions drive corporate climate action?

Nikolaus Hastreiter

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper investigates the effectiveness of collective investor engagement in regulating corporate climate action. Empirically, I focus on Climate Action 100+ (CA100+), the world’s largest investor coalition on climate change. To address common measurement issues in previous research, I conduct a multidimensional assessment of companies’ climate action. In particular, I collect new primary data on the ambition of carbon emission reduction targets and use the ClimateBERT model to analyse climate-related disclosure. To isolate the causal impact of CA100+, I examine the selection of the coalition’s focus companies and employ a Difference-in-differences analysis. While the findings suggest that CA100+ has had no effect on companies’ disclosures or reductions in carbon emissions, I observe a significant impact on targets. However, this effect holds only for medium- and long-term targets, not in the short-term, and is exclusively driven by companies potentially selected based on prior investor knowledge. Overall, this study finds limited effectiveness of collective engagement through CA100+. It raises questions about the importance of investor selectivity for engagement success and highlights the risk of companies backloading their decarbonisation efforts.

JEL-codes: M14 Q50 (search for similar items in EconPapers)
Pages: 85 pages
Date: 2024-10-01
New Economics Papers: this item is included in nep-ene and nep-env
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