The Big Three and Corporate Carbon Emissions Around the World
70 Pages Posted: 3 Apr 2020
Date Written: March 12, 2020
This paper examines the role of the “Big Three” (i.e., BlackRock, Vanguard, and State Street Global Advisors) on the reduction of corporate carbon emissions around the world. Using novel data on engagements of the Big Three with individual firms we find evidence that the Big Three focus their engagement effort on large firms with high CO2 emissions in which these investors hold a significant stake. Consistent with this engagement influence being effective, we observe a strong and robust negative association between Big Three ownership and subsequent carbon emissions among MSCI index constituents, a pattern that becomes strong in the later years of the sample period. Additional tests exploiting several sources of plausibly exogenous variation in Big Three ownership and in the cost of CO2 emissions suggest that these correlations probably reflect a causal link.
Keywords: Carbon emissions, Big Three, Shareholder Activism, Institutional Ownership
JEL Classification: M41
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