Do all institutional investors care about corporate carbon emissions?

Journal article


Alam, M., Alam, S. and Islam, S. 2022. Do all institutional investors care about corporate carbon emissions? Energy Economics. 115, pp. 1-20. https://doi.org/10.1016/j.eneco.2022.106376
AuthorsAlam, M., Alam, S. and Islam, S.
Abstract

This paper investigates whether institutional investors promote the abatement of corporate carbon emissions. Using firm-level data on the U. S from 2007 to 2017, we find that institutional investors help reduce carbon emissions. The result is more pronounced in firms with more independent (investment companies, investment advisors, and pension funds), long-term, and monitoring institutional ownership. Our result holds when we employ a quasi-natural experiment and the difference-in-differences approach to address endogeneity. The channel analysis documents that institutional investors help reduce carbon emissions by reducing energy consumption. We also find that shareholder activism is a proximal monitoring mechanism through which institutional investors influence firms to achieve better carbon performance. Finally, our results show that the advantage for institutional investors from reducing carbon emissions is higher firm value.

KeywordsCarbon emissions ; Institutional investors ; Monitoring Investment horizon
Year2022
JournalEnergy Economics
Journal citation115, pp. 1-20
PublisherElsevier
ISSN1873-6181
Digital Object Identifier (DOI)https://doi.org/10.1016/j.eneco.2022.106376
Web address (URL)https://doi.org/10.1016/j.eneco.2022.106376
Publisher's version
License
File Access Level
Open
Output statusPublished
Publication dates
Online21 Oct 2022
Publication process dates
Accepted11 Oct 2022
Deposited11 Dec 2023
Supplemental file
File Access Level
Open
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