Investor Impact on ESG

Episode 7 | ECGI Spotlight Series

Investor Impact on ESG

  • 18 October 2021
  • Online Seminar

 

Investor Impact on ESG

The seventh seminar in the ECGI Spotlight Series will be held on Monday, 18 October 2021 at 16:00 CEST (10:00 EDT).

The seminar will focus on three research papers from the ECGI Working Paper Series, presented by:

Roni Michaely, Michelle Lowry, Gaizka Ormazabal:

ES Votes That Matter

ES Risks and Shareholder Voice

The Big Three and Corporate Carbon Emissions Around the World

 

ABOUT THIS EVENT

Investors’ support for environmental and social (E&S) proposals at shareholder meetings has reached new heights in 2021, demonstrating that investors’ support on these issues has become increasingly strong.

In this seminar three separate studies regarding financial institutions’ involvement in promoting ES goals will be presented and discussed. These studies focus on whether and when financial institutions’ funds vote in support of ES proposals, whether they do so when their votes actually make a difference, and whether institutions’ votes contain information on firms’ future risks.

Additionally, the seminar will touch upon the engagements of large financial institutions with respect to reducing corporate carbon emissions around the world, and the impact of such engagements.

Register here: https://bit.ly/3ChAX1T

 

The ECGI Spotlight Series is a global online seminar programme highlighting chosen papers from the ECGI Working Paper Series.

Spotlight Team:

Mike Burkart (Editor) | Miriam Schwartz-Ziv | Amir Licht (Editor) | Geeyoung Min
Contact: Spotlight@ecgi.org

Supported by

 

            

Monday, 18 October 2021 | 16:00 CEST (10:00 EDT)

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ES Votes That Matter

Time:
16:05h

Authors:

Roni Michaely
The University of Hong Kong; ECGI

Guillem Ordonez-Calafi
University of Bristol

Silvina Rubio
University of Bristol

Abstract:

We find that environmental and social (ES) funds in non-ES families adopt a strategic voting pattern: they are supportive of ES proposals that pass or fail by large margins, but unsupportive when their votes are likely to be pivotal. As such, these funds are able to show considerably high support for ES proposals on average, consistent with their stated objectives, while aligning with conflicting family preferences when their votes are likely to make a difference. This voting pattern is predominantly driven by actively managed funds. Our results highlight possible conflict of interest between ES funds and their families; showing that, when it matters the most, family preferences towards ES prevail over funds stated objectives, and perhaps with their fiduciary responsibilities.

Paper: ES Votes That Matter

Speakers

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ES Risks and Shareholder Voice

Time:
16:20h

Authors:

Yazhou He
University of Manchester

Bige Kahraman
University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR)

Michelle Lowry
Drexel University; European Corporate Governance Institute (ECGI)

Abstract:

While shareholder proposals related to ES issues nearly always fail, we show that investors’ support for these proposals contains information regarding future risks that firms face. Support levels are informative regarding the probability of negative tail returns that stem from future ES incidents. Examining the economic channels underlying this finding, we find that agency frictions contribute to proposal failure, leading to predictable tail events. Contrasting ES versus non-ES failed proposals within the same firm, we find that predictability is unique to ES initiatives; this is consistent with higher uncertainty regarding the value of ES initiatives exacerbating agency frictions.

Paper: ES Risks and Shareholder Voice

Speakers

16:35

The Big Three and Corporate Carbon Emissions Around the World

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The Big Three and Corporate Carbon Emissions Around the World

Time:
16:35h

Authors: 

José Azar
University of Navarra, IESE Business School; CEPR

Miguel Duro
IESE Business School

Igor Kadach
University of Navarra, IESE Business School

Gaizka Ormazabal
University of Navarra, IESE Business School; European Corporate Governance Institute (ECGI)

Abstract: 

This paper examines the role of the “Big Three” (i.e., BlackRock, Vanguard, and State Street Global Advisors) on the reduction of corporate carbon emissions around the world. Using novel data on engagements of the Big Three with individual firms, we find evidence that the Big Three focus their engagement effort on large firms with high CO2 emissions in which these investors hold a significant stake. Consistent with this engagement influence being effective, we observe a strong and robust negative association between Big Three ownership and subsequent carbon emissions among MSCI index constituents, a pattern that becomes stronger in the later years of the sample period as the three institutions publicly commit to tackle ESG issues.

Paper: The Big Three and Corporate Carbon Emissions Around the World

Speakers

16:50

Q&A

Speakers

Presentations

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Introductory Remarks

Time:
16:00h

Speakers

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ES Votes That Matter

Time:
16:05h

Authors:

Roni Michaely
The University of Hong Kong; ECGI

Guillem Ordonez-Calafi
University of Bristol

Silvina Rubio
University of Bristol

Abstract:

We find that environmental and social (ES) funds in non-ES families adopt a strategic voting pattern: they are supportive of ES proposals that pass or fail by large margins, but unsupportive when their votes are likely to be pivotal. As such, these funds are able to show considerably high support for ES proposals on average, consistent with their stated objectives, while aligning with conflicting family preferences when their votes are likely to make a difference. This voting pattern is predominantly driven by actively managed funds. Our results highlight possible conflict of interest between ES funds and their families; showing that, when it matters the most, family preferences towards ES prevail over funds stated objectives, and perhaps with their fiduciary responsibilities.

Paper: ES Votes That Matter

Speakers

Back to all presentations

ES Risks and Shareholder Voice

Time:
16:20h

Authors:

Yazhou He
University of Manchester

Bige Kahraman
University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR)

Michelle Lowry
Drexel University; European Corporate Governance Institute (ECGI)

Abstract:

While shareholder proposals related to ES issues nearly always fail, we show that investors’ support for these proposals contains information regarding future risks that firms face. Support levels are informative regarding the probability of negative tail returns that stem from future ES incidents. Examining the economic channels underlying this finding, we find that agency frictions contribute to proposal failure, leading to predictable tail events. Contrasting ES versus non-ES failed proposals within the same firm, we find that predictability is unique to ES initiatives; this is consistent with higher uncertainty regarding the value of ES initiatives exacerbating agency frictions.

Paper: ES Risks and Shareholder Voice

Speakers

Back to all presentations

The Big Three and Corporate Carbon Emissions Around the World

Time:
16:35h

Authors: 

José Azar
University of Navarra, IESE Business School; CEPR

Miguel Duro
IESE Business School

Igor Kadach
University of Navarra, IESE Business School

Gaizka Ormazabal
University of Navarra, IESE Business School; European Corporate Governance Institute (ECGI)

Abstract: 

This paper examines the role of the “Big Three” (i.e., BlackRock, Vanguard, and State Street Global Advisors) on the reduction of corporate carbon emissions around the world. Using novel data on engagements of the Big Three with individual firms, we find evidence that the Big Three focus their engagement effort on large firms with high CO2 emissions in which these investors hold a significant stake. Consistent with this engagement influence being effective, we observe a strong and robust negative association between Big Three ownership and subsequent carbon emissions among MSCI index constituents, a pattern that becomes stronger in the later years of the sample period as the three institutions publicly commit to tackle ESG issues.

Paper: The Big Three and Corporate Carbon Emissions Around the World

Speakers

Q&A

Back to all presentations

Q&A

Time:
16:50h

Speakers