Extreme Weather Events Influence Shareholder Support of Climate-Related Initiatives
Scientists have been warning about climate change for years. Wildfires, landslides, melting icebergs and catastrophic hurricanes are just a few of the extreme climate-change related events that have occurred over recent years. Many companies have already adopted initiatives to protect the environment with some completely dedicated to going green. But this isn’t always the case.
According to research by Eliezer Fich, PhD, Dean’s Term Chair Professor of finance in Drexel University’s LeBow College of Business, and Guosong Xu, assistant professor of finance in Rotterdam School of Management at Erasmus University, while demand from investors for corporate accountability around climate change-related initiatives is growing, environmental proposals rarely receive wide support. In a recent study, Fich and Xu found that from 2006-2020 only 2.8% of such proposals passed during shareholder meetings.
The researchers argue that the lack of shareholder support comes from the perception that climate risks are a concern in faraway regions but not locally. They tested this conjecture in their paper, “Do Salient Climate Risks Affect Shareholder Voting? “ and found that shareholders are more likely to vote for/approve climate-related initiatives immediately after they are affected by a devastating weather event.
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