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7 2019 12:30 - 14:00
Meeting room 4E4SR03 - Via Roentgen, 1

Improving Corporate Governance: Shareholder Activism and the Voluntary Disclosure of Climate Risks


Caroline Flammer (Boston University)


This paper examines whether shareholder activism induces management to voluntarily disclose the firm’s exposure to climate risks. Using data for U.S. companies from the Carbon Disclosure Project (CDP), we show that environmental shareholder activism—through the submission of shareholder proposals—increases the voluntary disclosure of climate change risks. Moreover, environmental shareholder activism is particularly effective if it is initiated by institutional investors (i.e., investors who have more “power”), and even more so if it is initiated by long-term and green institutional investors (i.e., investors whose request has more “legitimacy”). Finally, we find that companies that voluntarily disclose climate change risks following environmental shareholder activism achieve a higher valuation. Overall, these findings indicate that active shareholders can elicit greater climate risk disclosure and hereby improve corporate governance.