The Real Effects of Environmental Activist Investing
70 Pages Posted: 5 Dec 2019 Last revised: 21 Sep 2020
Date Written: September 18, 2020
We study the real effects of environmental activist investing. Using plant-level data, we find that targeted firms reduce their toxic releases, greenhouse gas emissions, and cancer-causing pollution. Improvements in air quality within a one-mile radius of targeted plants suggest potentially important externalities to local economies. These improvements come through increased capital expenditures on new abatement initiatives. We rule out alternative explanations of decline in production, reporting biases, and forms of selection, while also providing evidence supporting the external validity of environmental activism. Overall, our study suggests that engagements are an effective tool for long-term shareholders to address climate change risks.
Keywords: Activism, Environmental Social and Governance, Socially Responsible Investment, Corporate Social Responsibility, Pensions
JEL Classification: G23, G34, M14, Q50
Suggested Citation: Suggested Citation