Selection and Effects of Environmental and Social Engagement by Institutional Investors

Kexin Lin, Yosuke Kimura and Kotaro Inoue

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This study uses proprietary data on environmental and social issue engagement in Japan to examine institutional investors’ selection criteria and the effects of engagement on the environmental and social performance of companies. The results indicate that institutional investors engage with companies that align with their monitoring motivations, exhibit relatively good capital efficiency, and demonstrate good governance practices. Additionally, environmental engagements lead to the adoption of long-term CO2 emission targets and a reduction in companies' CO2 emissions. Social and governance engagement increased the representation of women on corporate boards. These results indicate the presence of differences in the effects of engagements across different themes.

Pages: 54 pages
Date: 2023-12
New Economics Papers: this item is included in nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:23091

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