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Climate Risk Engagements

Author

Listed:
  • Derrien, François

    (HEC Paris)

  • Garel, Alexandre

    (Audencia Business School)

  • Romec, Arthur

    (Toulouse Business School)

  • Zhou, Feng

    (Toulouse Business School)

Abstract

We study climate-risk related engagements by one of the world's largest investors. Climate risk engagements represent a growing fraction of ESG engagements and are more frequent in high carbon emissions industries. We find that firms with greater carbon footprint and greater exposure to climate transition risk are more likely to be targeted. Following a climate risk engagement, targeted firms are more likely to commit to adopt a science-based climate target and to disclose climate-related information. Targeted firms also experience a reduction in their carbon emissions. However this reduction is limited to scope 1 and 2 emissions and its magnitude is inconsistent with net-zero targets. We also find that climate risk engagements are associated with greater voting support for management. Overall, our results suggest that shareholder engagement on climate issues can be an important tool in the fight against climate change.

Suggested Citation

  • Derrien, François & Garel, Alexandre & Romec, Arthur & Zhou, Feng, 2025. "Climate Risk Engagements," HEC Research Papers Series 1543, HEC Paris.
    • Handle: RePEc:ebg:heccah:1543
    DOI: 10.2139/ssrn.5051906
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    More about this item

    Keywords

    Shareholder Engagement; Climate Change; Carbon Emissions; ESG; Activism;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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