The Real Effects of Environmental Activist Investing
By S Lakshmi Naaraayanan, Kunal Sachdeva, Varun Sharma
Using a socially-motivated activist campaign by a large pension fund, we measure the real effects of activist investing on pollution and the environment. Targeted firms reduced their total toxic chemical releases, production-related emissions, cancer-causing pollution, environmental accidents, and legal risks. These effects do not come at the expense of lower financial performance or returns. We rule out natural alternative hypotheses while also presenting evidence supporting the external validity of socially motivated activism. These findings suggest that shareholders can delegate their pro-social preferences onto firms to maximize their total value between their financial and non-pecuniary benefits.
Source: SSRN
