This paper examines how climate regulatory risk affects shareholders votes for climate proposals. Using U.S. shareholder-sponsored CSR proposals from 2003-2020 and a Difference-in Differences framework, I find that the adoption of the Paris Agreement increases shareholder votes for climate proposals requesting disclosure. The effect is sufficiently strong that it is only weakly attenuated by President Trump’s subsequent announcement of U.S. withdrawal from the Paris Agreement. By contrast, the Paris Agreement has little impact on support for prescriptive climate proposals that demand specific corporate actions; Instead, support for these proposals declines in periods of heightened political uncertainty. Moreover, using a regression discontinuity design, I show that the passage of climate disclosure proposals with a narrow margin generates positive abnormal stock returns on the voting day, indicating that shareholders reward firms for climate-related transparency. The results offer implications for policymakers by showing the limitation of private ordering. It suggests that while shareholder activism may be able to advance climate-related disclosure, regulatory mandates remain essential for driving substantive emissions reductions and facilitating the transition to a low-carbon economy.
