Climate Change and Mutual Fund Voting on Environmental Proposals

Abstract

This paper explores whether investors’ personal experience of climate change affects their voting behavior on environmental issues. We find that fund managers exposed to abnormally hot temperatures are significantly more likely to support environmental proposals. This increased support is stronger for proposals targeting firms with greater climate risk. The effect is more pronounced for funds that a priori tend to vote against environmental proposals (e.g., non-SRI funds, funds located in Republican states and climate sceptic areas). Overall, we show that fund managers’ experiences and increased awareness of climate change have a positive effect on their support for environmental policies.

Keywords: Climate Change, Shareholder Voting, Mutual Funds

JEL Classification: G30, Q54