Does a Mutual Fund's Exposure to Pollution Influence its Environmental Engagements?

56 Pages Posted: 29 Jan 2023

See all articles by Pouyan Foroughi

Pouyan Foroughi

York University - Schulich School of Business

Alan J. Marcus

Boston College - Department of Finance

Vinh Nguyen

The University of Hong Kong

Abstract

Examining the impact of local air pollution on mutual funds’ voting behavior, we study the possible relationship between mutual fund management’s direct experience with extreme environment events and the fund’s engagements with its portfolio companies on environmental issues. We find that higher air pollution in a fund’s home county increases its propensity to vote in support of shareholders’ environmental proposals. The effect is weakened by fund manager turnovers, and managers’ affiliation with the Republican Party. Conversely, the effect is stronger in more highly contested environmental proposals. Overall, our results suggest that mutual fund management’s direct experience with extreme environment events plays a crucial role in motivating the fund’s environmental engagements.

Keywords: mutual fund voting, environment, air pollution

Suggested Citation

Foroughi, Pouyan and Marcus, Alan J. and Nguyen, Vinh, Does a Mutual Fund's Exposure to Pollution Influence its Environmental Engagements?. Available at SSRN: https://ssrn.com/abstract=4342011 or http://dx.doi.org/10.2139/ssrn.4342011

Pouyan Foroughi

York University - Schulich School of Business ( email )

111 Ian MacDonald Blvd
North York, Ontario M3J 1P3
Canada

Alan J. Marcus (Contact Author)

Boston College - Department of Finance ( email )

Fulton Hall
Chestnut Hill, MA 02467
United States
617-552-2767 (Phone)
617-552-0431 (Fax)

Vinh Nguyen

The University of Hong Kong ( email )

833 KK Leung Building
Pok Fu Lam Road
Hong Kong
Hong Kong

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