Publications
Publications
- April 22, 2021
- Harvard Business Review Digital Articles
Shareholders Are Pressing for Climate Risk Disclosures. That's Good for Everyone
By: Caroline Flammer, Michael W. Toffel and Kala Viswanathan
Abstract
Does shareholder activism induce firms to voluntarily disclose climate change risks? And how do markets respond to these disclosures? New research finds that the extent of climate-risk disclosure increases by approximately 4.6% for each environment-related proposal that is submitted, and that the effect rises to 6.8% when environmental shareholder activism is initiated by institutional shareholders with a long-term holding horizon. It also found that the stock market responds favorably to such disclosures, with a disclosing firm’s stock price increasing by 1.21% on average in the days following a disclosure. This suggests that investors value higher transparency with respect to climate change risks and that disclosure tends to benefit disclosing companies.
Keywords
Reporting; Transparency; Activism; Shareholder Activism; Shareholder Engagement; Climate Change; Corporate Disclosure; Investment Activism; Business and Shareholder Relations
Citation
Flammer, Caroline, Michael W. Toffel, and Kala Viswanathan. "Shareholders Are Pressing for Climate Risk Disclosures. That's Good for Everyone." Harvard Business Review Digital Articles (April 22, 2021).
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