Speaker: Igor Kadach, IESE Business School
"This paper examines the role of the “Big Three” (i.e., BlackRock, Vanguard, and State Street Global Advisors) on the reduction of corporate carbon emissions around the world. Using novel data on engagements of the Big Three with individual firms we find evidence that these engagements are related to CO2 emissions. The results also suggest that the Big Three focus their engagement effort on large firms in which they hold a significant stake. Consistent with these engagements being effective, we observe a strong and robust negative association between Big Three ownership and subsequent carbon emissions among MSCI index constituents. Additional tests exploiting several sources of plausibly exogenous variation in Big Three ownership as well as in the cost of CO2 emissions suggest that these correlations probably reflect a causal link. These results are not restricted to a specific economic region or legal system."