Timing Sustainable Engagement in Real Asset Investments
83 Pages Posted: 3 Jul 2024 Last revised: 19 Nov 2024
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Timing Sustainable Engagement in Real Asset Investments
Timing Sustainable Engagement in Real Asset Investments
Date Written: July 02, 2024
Abstract
This paper estimates the effect of sustainable shareholder engagement on firm's investments. We study the real estate industry where investments are sporadic and occur following depreciation cycles. SEC restrictions on shareholder proposals, in combination with the asset depreciation cycles, create random variation enabling us to identify firms' sustainable investment decisions. Using unique microdata tracking investments in all public US commercial real estate properties over the past two decades, we find that sustainable engagement effectively steers firms to initiate tangible and long-lasting sustainable retrofits. However, engagement is ineffective or impairs such investments when it does not coincide with reinvestment periods, or investors vote down the proposal.
Keywords: engagement, shareholder proposals, sustainable investing, sustainable finance, ESG, CSR, Climate
JEL Classification: G11, M14, Q56, R0
Suggested Citation: Suggested Citation