Descripción del proyecto
Should firms maximize financial value without regard to any environmental and social damages? If not, how should shareholders convey their social and environmental preferences? And, how should investors form their portfolio strategies and engage with the companies they invest in to mitigate climate change and other externalities? These are new fundamental questions firms and investors are confronted with in the face of accelerating climate change, and the new role financial markets are expected to play in the fight against climate change. Another transformational development is the rise of institutional investors –asset managers, insurance companies, pension funds, and sovereign wealth funds—who together own more than 70% of the shares of publicly traded companies. These institutional investors are de facto the critical actors to aggregate investor preferences and engage with companies on their behalf.
This research project is divided into two major themes: (A) to determine how financial markets provide the asset price signals and information to help investors shape their portfolio strategies in the face of climate change risk; (B) to identify how institutional investors approach climate change and engage with companies to lead them to accelerate the transition towards renewable energy. These two themes cannot be separated from public policy towards climate change, and the broader context of the global fight against climate change by governments, municipalities, regulators and civil society. Accordingly, a major aspect of the research is to make explicit how public policy shapes corporate behaviour through the actions of institutional investors.