Voice Through Divestment

57 Pages Posted: 13 Mar 2023 Last revised: 26 Jul 2023

See all articles by Marco Becht

Marco Becht

Solvay Brussels School of Economics and Management (ULB); European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Anete Pajuste

Stockholm School of Economics, Riga; European Gorporate Governance Institute (ECGI); Boston University

Anna Toniolo

Harvard University - Harvard Law School

Date Written: March 9, 2023


A common argument against divestment is that it discards voting power and has a small effect on stock prices. We argue that divestment is a statement of disapproval that aligns actions with words for effectiveness. We show that the Go Fossil Free divestment movement is a narrative with impact. Viral divestment pledges depressed the share prices of all high carbon emitters, including those with no divestment. Peak virality coincided with a concurrent rise in the carbon premium and preceded net-zero commitments. The introduction of these commitments effectively recast divestment from a moral statement to a strategic exercise in risk management.

Keywords: Divestment, fossil free, carbon budget, shareholder engagement, responsible investment, climate change, carbon premium, economic narratives, net-zero commitments, social preferences, tweets as data

JEL Classification: D23, K22, G32, G34

Suggested Citation

Becht, Marco and Pajuste, Anete and Toniolo, Anna, Voice Through Divestment (March 9, 2023). European Corporate Governance Institute – Finance Working Paper No. 900, 2023, Available at SSRN: https://ssrn.com/abstract=4386469 or http://dx.doi.org/10.2139/ssrn.4386469

Marco Becht (Contact Author)

Solvay Brussels School of Economics and Management (ULB) ( email )

42 Avenue F. D. Roosevelt
Brussels, 1050
+32 2 6504466 (Phone)

HOME PAGE: http://www.solvay.edu/profile/marcobecht

European Corporate Governance Institute (ECGI) ( email )

Palace of the Academies
Rue Ducale 1 Hertogstraat
Brussels, 1000

HOME PAGE: http://www.ecgi.global/users/marco-becht

Centre for Economic Policy Research (CEPR)

United Kingdom

Anete Pajuste

Stockholm School of Economics, Riga ( email )

Strelnieku iela 4a
Riga, LV 1010

European Gorporate Governance Institute (ECGI) ( email )

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

Boston University

595 Commonwealth Avenue
Boston, MA 02215
United States

Anna Toniolo

Harvard University - Harvard Law School ( email )

1563 Massachusetts Avenue
Cambridge, MA 02138
United States

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