We construct firm-level measures of nature dependence, capturing the extent to which a firm's business activities rely on different ecosystem services. The measures cover 26,595 listed firms from 115 countries between 2010 and 2022. Nature dependence is positively correlated with a firm's impact on biodiversity but shows little correlation with exposure to physical climate risk. Nature dependence is neither related to nature-related corporate actions disclosed in the CDP survey nor reflected in firms' corporate disclosures. Interestingly, a firm's nature dependence is positively associated with measures of downside risk. These risk effects stem from high dependences on certain ecosystem services, rather than from low or moderate dependences on a greater number of ecosystem services. Nature dependence also predicts the likelihood of being targeted by BlackRock's biodiversity engagements. Overall, investors start paying attention to nature dependence, while corporate action and disclosure remain limited.
This study investigates the impact of climate-related disclosure on investor support for directors in board elections. Firms not disclosing carbon emissions receive significantly lower support for their directors, a trend robust to various controls, including governance proxies and ESG incidents. Firms initiating climate disclosure see increased director support. Sustainable funds and universal investors are key drivers of this trend. Moreover, investors supporting shareholder-sponsored climate proposals are more likely to vote against directors in firms lacking carbon disclosure. These findings highlight the increased tendency to vote against directors as a mean to change boards' approach towards climate change issues and climate disclosure in particular.
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.
We examine firms’ response to a carbon disclosure mandate imposed on French firms with more than 500 employees by the Grenelle II law. We find that only half of the firms subject to the mandate comply and file at least one carbon report between 2014 and 2021. Conditional on filing a report, virtually all the firms report their scope 1 and scope 2 emissions. However, only a fraction of the firms report their scope 3 emissions. Similarly, we document considerable heterogeneity in firms’ decisions to provide an action plan to reach targeted reductions in future carbon emissions. Importantly, the propensity to file a carbon report and to include an action plan is lower for firms in more carbon-intensive industries. Finally, we find that expected carbon emission reduction is associated with the actual reduction in emissions, especially for firms that provide clear action plans with quantitative metrics.
This paper examines the voting behavior of women-led mutual funds. We find that women-led mutual funds are more likely to support environmental and social (ES) proposals, but not governance ones. Women-led mutual funds are also more likely to vote with management in firms headed by female CEOs. This in-group favoritism however does not conflict with the tendency of women-led mutual funds to support ES proposals. Our results suggest that female representation in fund management teams influences their voting behavior.