Shareholder Activism and Firms' Voluntary Disclosure of Climate Change Risks

Caroline  Flammer; Michael W. Toffel; Kala  Viswanathan

Working Paper | HBS Working Paper Series | 2019

Shareholder Activism and Firms' Voluntary Disclosure of Climate Change Risks

by Caroline Flammer, Michael W. Toffel and Kala Viswanathan

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 investors who are more powerful (institutional investors) or whose request has more legitimacy (long-term institutional investors). We also find that companies that voluntarily disclose climate change risks following environmental shareholder activism achieve a higher valuation, suggesting that investors value transparency with respect to climate change risks.

Keywords: Corporate Accountability; Corporate Disclosure; Corporate Social Responsibility and Impact; Business and Shareholder Relations; Risk and Uncertainty; Natural Environment; Environmental Sustainability; Weather and Climate Change; Financial Services Industry; United States;

Language: English

Format: Print

44 pages

SSRN Read Now

Citation:

Flammer, Caroline, Michael W. Toffel, and Kala Viswanathan. "Shareholder Activism and Firms' Voluntary Disclosure of Climate Change Risks." Harvard Business School Working Paper, No. 20-049, October 2019.

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Shareholder Activism and Firms' Voluntary Disclosure of Climate Change Risks

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