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The real effects of environmental activist investing

Subject

Finance, Finance

Publishing details

Social Sciences Research Network

Authors / Editors

Naaraayanan L;Sachdeva K;Sharma V

Biographies

Lakshmi Naaraayanan

Publication Year

2020

Abstract

We study the real effects of environmental activist investing. Using plant-level data, we find that targeted firms reduce their toxic releases, greenhouse gas emissions, and cancer-causing pollution. Improvements in air quality within a one-mile radius of targeted plants suggest potentially important externalities to local economies. These improvements come through increased capital expenditures on new abatement initiatives. We rule out alternative explanations of decline in production, reporting biases, and forms of selection, while also providing evidence supporting the external validity of environmental activism. Overall, our study suggests that engagements are an effective tool for long-term shareholders to address climate change risks.

Keywords

Activism; Environmental social and governance; Socially responsible investment; Corporate social responsibility; Pensions

Series Number

3483692

Series

Social Sciences Research Network

Available on ECCH

No

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