Institutional investors increasingly file shareholder proposals to improve firms’ environmental and social performance, yet evidence on their effectiveness remains limited. This paper shows that timing is critical: proposals only trigger sustainable investment in firms when they coincide with natural reinvestment cycles — periods when firms’ long-lived assets are due for replacement. SEC filing restrictions, combined with the unpredictable timing of asset depreciation, generate quasi-random variation that allows us to identify the causal effect of proposal timing. Using novel microdata on retrofit activity across all U.S. publicly listed commercial real estate firms’ properties from 1990 to 2022, we find that proposals filed during reinvestment cycles increase the share of sustainable retrofits by 21.5%; otherwise, they have no effect. We replicate these findings in the U.S. heavy manufacturing industry. Our results suggest that the effectiveness of sustainable finance depends not only on who investors target, but also when they do so.
