Shareholder Activism and Firms' Voluntary Disclosure of Climate Change Risks

62 Pages Posted: 22 Oct 2019 Last revised: 6 Mar 2021

See all articles by Caroline Flammer

Caroline Flammer

Boston University

Michael W. Toffel

Harvard Business School

Kala Viswanathan

Harvard University - Business School (HBS)

Date Written: March 6, 2021

Abstract

This paper examines whether -- in the absence of mandated disclosure requirements -- shareholder activism can elicit greater disclosure of firms' exposure to climate change risks. We find that environmental shareholder activism increases the voluntary disclosure of climate change risks, especially if initiated by institutional investors, and even more so if initiated by long-term institutional investors. We also find that companies that voluntarily disclose climate change risks following environmental shareholder activism achieve a higher valuation post disclosure, suggesting that investors value transparency with respect to firms' exposure to climate change risks.

Keywords: shareholder activism, climate risk, climate change, corporate disclosure, corporate governance

JEL Classification: P28, G3, L2, M14, M38, Q5

Suggested Citation

Flammer, Caroline and Toffel, Michael W. and Viswanathan, Kala, Shareholder Activism and Firms' Voluntary Disclosure of Climate Change Risks (March 6, 2021). Available at SSRN: https://ssrn.com/abstract=3468896 or http://dx.doi.org/10.2139/ssrn.3468896

Caroline Flammer (Contact Author)

Boston University ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

HOME PAGE: http://sites.bu.edu/cflammer/

Michael W. Toffel

Harvard Business School ( email )

Boston, MA 02163
United States
617.384.8043 (Phone)

Kala Viswanathan

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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