Institutional Investors, Climate Disclosure, and Carbon Emissions (formerly titled "Why Do Institutional Investors Request Climate Related Disclosures?")

81 Pages Posted: 21 Jun 2022 Last revised: 9 Jun 2023

See all articles by Shira Cohen

Shira Cohen

San Diego State University

Igor Kadach

University of Navarra, IESE Business School

Gaizka Ormazabal

University of Navarra, IESE Business School; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Date Written: June 3, 2023

Abstract

Note: an earlier version of this paper has been circulated under the title “Why do Institutional Investors Request Climate Related Disclosures?”

Exploiting the unique features of the CDP, the world-leading platform of corporate climate risk disclosures, we study the relationship between institutional investors’ demand for climate-related information (as reflected in their CDP signatory status), firms’ decision to disclose this information, and corporate carbon emissions. We provide systematic international evidence that ownership by CDP signatories is positively associated with the probability of disclosing information to the CDP, and that such disclosure is associated with subsequent lower carbon emissions. We also observe that CDP signatories are more likely to engage with and divest from top emitters disclosing to the CDP. Overall, these results are consistent with the notion that investor demand for climate-related information results in greater corporate disclosure and contributes to firms’ decisions to lower future carbon emissions.

Keywords: Climate-related Disclosure, Shareholder Activism, Institutional Ownership, Greenwashing.

JEL Classification: G11, Q54, M41

Suggested Citation

Cohen, Shira and Kadach, Igor and Ormazabal, Gaizka, Institutional Investors, Climate Disclosure, and Carbon Emissions (formerly titled "Why Do Institutional Investors Request Climate Related Disclosures?") (June 3, 2023). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=4138869 or http://dx.doi.org/10.2139/ssrn.4138869

Shira Cohen (Contact Author)

San Diego State University ( email )

San Diego, CA 92182-0763
United States

Igor Kadach

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Gaizka Ormazabal

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

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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