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The Role of ‘Green’ Investors in Reducing Corporate Carbon Emissions
By National Bureau of Economic Research
The researchers categorize public pension funds based on the political affiliation of the leaders who control them. Those under Democratic control, either through governance or board trusteeship, were labeled “green.” Those under Republican control were labeled “non-green.” The researchers assume that Democrats generally favor carbon emission reductions more than Republicans.
They study emissions data from 2010–21 for 5,241 facilities across 685 publicly traded companies, along with data on pension fund stock holdings for 24 of the US’s 50 largest public funds. These funds collectively managed over 88 percent of total public pension assets in the US. Companies reduced their greenhouse gas emissions as the ownership stake of green pension funds rose. A 1 percentage point rise in shares owned by green pension funds was associated with a 3.1 percent decline in carbon emissions over four years, and a 5.2 percentage point increase in the probability of some carbon emission reduction over this period. Increased ownership by non-green funds was not associated with any decline, and may be associated with an increase in emissions.
Source NBER
