The Big Three and Corporate Carbon Emissions Around the World

70 Pages Posted: 3 Apr 2020

See all articles by José Azar

José Azar

University of Navarra, IESE Business School; CEPR

Miguel Duro

IESE Business School

Igor Kadach

University of Navarra, IESE Business School

Gaizka Ormazabal

University of Navarra, IESE Business School; European Corporate Governance Institute (ECGI)

Date Written: March 12, 2020

Abstract

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

Suggested Citation

Azar, José and Duro, Miguel and Kadach, Igor and Ormazabal, Gaizka, The Big Three and Corporate Carbon Emissions Around the World (March 12, 2020). Available at SSRN: https://ssrn.com/abstract=3553258 or http://dx.doi.org/10.2139/ssrn.3553258

José Azar

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

CEPR ( email )

London
United Kingdom

HOME PAGE: http://https://sites.google.com/site/joseazar/

Miguel Duro

IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Igor Kadach

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Gaizka Ormazabal (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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