Working Paper: CEPR ID: DP15522
Authors: Gaizka Ormazabal; Jos Azar; Miguel Duro; Igor Kadach
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.
Keywords: climate change; carbon emissions; esg; big three; shareholder activism; institutional ownership
JEL Codes: M41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| big three ownership (G32) | corporate CO2 emissions (G30) |
| increase in big three ownership (G34) | lower subsequent CO2 emissions (Q42) |
| big three ownership (G32) | stronger influence on CO2 emissions (F64) |
| big three ownership (G32) | reduction in corporate CO2 emissions among MSCI firms (G34) |