Propagation of Climate Disasters Through Ownership Networks

Abstract

Institutional investors holding firms hit by climate-related disasters vote more in favor of climate-related shareholder proposals at their other portfolio firms. This relation arises via investors becoming more active voters on climate-related pro posals and is strongest following recent exposure to large value-relevant disas ters, during periods of elevated attention to climate risks, and for votes occurring at carbon-intensive firms. Aggregating to the firm level, firms with impacted investors exhibit lower climate change sentiment on conference calls and a lon ger-term decrease in emissions. Thus, climate disasters ripple through ownership networks to influence corporate behavior toward environmental responsibility.