Timing Sustainable Shareholder Proposals in Real Asset Investments

Abstract

This paper estimates the effect of shareholder proposals on firms' investments. We use unique micro-data tracking sporadic investments following depreciation waves in all public US commercial real estate properties over the past two decades. SEC restrictions, in combination with these asset depreciation waves, create random variation, enabling us to identify the impact of the shareholder proposal. We find that sustainable shareholder proposals effectively steer firms to initiate tangible and long-lasting sustainable retrofits. However, proposals are ineffective or impair such reinvestment when they do not coincide with physical depreciation periods or investors vote it down. 

Keywords: Corporate Governance, Physical depreciation, Real assets, Socially Responsible Investing, ESG, CSR, Sustainable Finance

JEL Classification: G11, M14, Q56, R0