Timing Sustainable Engagement in Real Asset Investments

Bram van der Kroft, Juan Palacios, Roberto Rigobon and Siqi Zheng

No 32646, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper estimates the effect of sustainable shareholder engagement on firm's investments. We study the real estate industry where investments are sporadic and occur following depreciation cycles. SEC restrictions (rule 240.14a-8) on shareholder proposals, in combination with the asset depreciation cycles, create random variation enabling us to identify firms' sustainable investment decisions. Using unique micro-data tracking investments in all public US commercial real estate properties over the past two decades, we find that sustainable engagement effectively steers firms to initiate tangible and long-lasting sustainable retrofits. However, engagement is ineffective or impairs such investments when it does not coincide with reinvestment periods, or investors vote down the proposal.

JEL-codes: G11 M14 Q56 R0 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-env and nep-ure
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