Making sure your vote does not count: green activism and strategic proxy voting

Working paper

This paper models green activism and proxy voting on green shareholder proposals by strategic institutional blockholders who have heterogeneous reputational concerns and varying levels of commitment to green values. Activists propose changes in firm policy that, if adopted, lower firm value but produce collateral environmental benefits. We show that activists never bear the costs of value destruction engendered by their proposals. Even when blockholders are very unlikely to share the activists’ commitments to green values and thus would oppose green proposals if they voted as if pivotal, green proposals garner substantial blockholder support, sometimes sufficient for passing, Our analysis also provides a number of non-obvious comparative static results that identify non-monotonic relationships between blockholder preferences and the likelihood of proposals passing, as well as between ownership concentration and the shareholder wealth effects of green activism.

Authors: Jin, D; Noe, TH

• Publication status: Published
• Peer review status: Reviewed (other)
• Publisher: HKU Jockey Club Enterprise Sustainability Global Research Institute
• Series: HKU Jockey Club Enterprise Sustainability Global Research Institute Paper Series
• Publication date: 2024-07-26
• DOI: 10.2139/ssrn.4906485
• Language: English
• Keywords: pseudo-green activists; crypto-green shareholders; green activism; strategic voting; greenwashing