Which Institutional Investors Drive Corporate Sustainability?

70 Pages Posted: 21 Jan 2022

See all articles by Marco Ceccarelli

Marco Ceccarelli

Maastricht University - Department of Finance

Simon Glossner

Board of Governors of the Federal Reserve System

Mikael Homanen

City University London - The Business School; PRI Association

Daniel Schmidt

Technische Universität München (TUM)

Date Written: December 13, 2021

Abstract

Many institutional investors publicly commit to some form of responsible investment. This raises concerns about the credibility of such claims. We use participation in collaborative engagements to identify "Leaders", i.e., institutional investors that are truly committed to improving firms' sustainability outcomes. Despite owning only 2.2% of the average firm, Leaders alone explain the positive relationship between institutional ownership and firms’ environmental and social performance. In line with committed owners facilitating corporate change, engagement campaigns are successful only when firms are substantially owned by Leaders. We also find that these firms are less at risk of experiencing negative incidents.

Keywords: Sustainabile investing, institutional investors, collaborative engagements

JEL Classification: F39, G23, G32, G40

Suggested Citation

Ceccarelli, Marco and Glossner, Simon and Homanen, Mikael and Schmidt, Daniel, Which Institutional Investors Drive Corporate Sustainability? (December 13, 2021). Available at SSRN: https://ssrn.com/abstract=3988058 or http://dx.doi.org/10.2139/ssrn.3988058

Marco Ceccarelli (Contact Author)

Maastricht University - Department of Finance ( email )

Tongersestraat 53
Maastricht, 6211 LM
Netherlands

HOME PAGE: http://https://sites.google.com/view/marcoceccarelli

Simon Glossner

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Mikael Homanen

City University London - The Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

PRI Association ( email )

25 Camperdown Street
London, E18DZ

Daniel Schmidt

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

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