Authors: Marco Ceccarelli (VU University Amsterdam), Simon Glossner (Board of Governors of the Federal Reserve System), Mikael Homanen (City University London), Daniel Schmidt (Technische Universität München (TUM))
Many institutional investors publicly commit to some form of responsible investment. This raises concerns about the credibility of such claims. We use participation in collaborative engagements to identify “Leaders”, i.e., institutional investors that are truly committed to improving firms’ sustainability outcomes. Despite owning only 2.2% of the average firm, Leaders alone explain the positive relationship between institutional ownership and firms’ environmental and social performance. In line with committed owners facilitating corporate change, engagement campaigns improve a targeted firm’s sustainable performance only when Leaders have a high ownership stake in the firm.
