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Harvard Business Review

Harvard Business Review: Shareholder Activism for Climate Risk Disclosures

Harvard Business Review recently published an article coauthored by Caroline Flammer, Dean’s Research Scholar and Associate Professor of Strategy and Innovation. Caroline and her coauthors at Harvard Business School explored what effect shareholder activism has on companies disclosing the risks of climate change on their business and how such disclosures affect markets and the companies themselves.

Caroline Flammer

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Harvard Business Review recently published an article coauthored by Caroline Flammer, Dean’s Research Scholar and Associate Professor of Strategy and Innovation. Caroline and her coauthors at Harvard Business School explored what effect shareholder activism has on companies disclosing the risks of climate change on their business and how such disclosures affect markets and the companies themselves.

Our analysis shows that shareholder activism — measured by the number of environment-related shareholder proposals submitted to a company — does induce firms to voluntarily disclose climate change risks. On average, the extent of climate-risk disclosure increases by approximately 4.6% for each environment-related proposal that is submitted. We also found that environmental shareholder activism is more effective when initiated by institutional shareholders with a long-term holding horizon: The effect rises from 4.6% to 6.8%.

Caroline Flammer is an Associate Professor and Dean’s Research Scholar at Boston University. She is an expert in sustainable investing and the recipient of numerous prestigious awards. Her research examines how, and under which conditions, firms can enhance their competitiveness and long-term profitability while strengthening—instead of undermining—the very system in which they operate and hereby play a critical role in addressing climate change, inequality, global health, and other grand challenges related to society and the natural environment. The Web of Science ranked her among the top-100 Highly Cited Researchers in the economics and business profession in terms of impact over the past 10 years.