Private Shareholder Engagements on Material ESG Issues

Figures & data

Table

	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	Total	Material (%)
Environment	86	33	278	76	373	207	34	66	417	127	193	64	116	76	2146	70.55
Environment	7	9	15	21	316	171	6	21	11	49	157	7	9	8	807	74.35
Ghg emissions	33	9	197	33	12	6	8	13	391	8	9	15	34	34	802	72.19
Water and wastewater management		2	56	8	4	9	13	17	5	37	19	16	17	6	209	80.38
Ecological impacts	38	2	6	13	37	7	1	4	5	13	1	2	9	11	149	51.68
Waste and hazardous materials management	2	1	2		4	12	4	4	4		5	18	31	12	99	62.63
Energy management	6	10	2	1		2	1	7	1	20	1	3	12	4	70	30.00
Air quality							1				1	3	4	1	10	70.00
Human capital	28	17	17	26	21	55	19	44	43	10	18	32	101	167	598	43.31
Employee health and safety	7	9	6	18	17	45	15	8	2	7	6	4	14	101	259	54.83
Labor practices	21	7	9	6	3	9	2	20	17	2	7	25	52	43	223	39.91
Employee engagement, diversity, and inclusion		1	2	2	1	1	2	16	24	1	5	3	35	23	116	24.14
Social capital	48	28	41	48	50	33	35	38	28	49	38	141	57	53	687	63.76
Human rights and community relations	16	17	13	23	35	16	13	22	18	5	4	3	9	25	219	47.95
Data security	11	1			2		9	2	4	4	11	89	5	3	141	57.45
Customer welfare	3	4	16	5		14	3	2	3	9	5	10	31	14	119	85.71
Access and affordability	6	2	2	5	4	3	2	2		8	11	14	3	4	66	84.85
Product quality and safety	4	1	1	1	5		4	4	2	6	5	21	6	5	65	64.62
Selling practices and product labeling	3	2	3	13	4		4	2	1	16	2	3	3	1	57	66.67
Customer privacy	5	1	6	1				4		1		1		1	20	70.00
Business model and innovation	45	26	82	53	45	83	68	52	109	54	46	50	144	161	1018	67.58
Supply chain management	25	11	31	36	24	55	23	14	74	23	7	8	64	69	464	66.38
Product design and lifecycle management	15	11	40	14	13	21	13	6	6	13	33	32	44	74	335	74.33
Business model resilience	1	2	10	1	4	1	29	29	29	14	1	1	7	10	139	63.31
Materials sourcing and efficiency	4	1	1	1	3	5	3	2		4	5	9	28	8	74	52.70
Physical impacts of climate change		1		1	1	1		1					1		6	66.67
Leadership and governance	23	17	22	76	132	70	120	76	66	13	9	19	17	33	693	53.68
Business ethics	20	15	15	74	126	52	112	69	10	8	6	15	9	17	548	59.31
Management of the legal and regulatory environment	3	2	3	1	3	15	6	6	55	3	1	4	6	13	121	27.27
Critical incident risk management			2		3	3				1	1				10	70.00
Systemic risk management			1				1		1	1	1		1	3	9	66.67
Competitive behavior			1	1			1	1					1		5	20.00
Governance (traditional)	67	83	69	97	84	114	150	229	321	137	273	259	206	184	2273	100.00
Total	297	204	509	376	705	562	426	505	984	390	577	565	641	674	7415	74.77

Notes: The table presents the number of engagements by year and topic in A. The engagement year is the year of the first activity within an engagement sequence. In B, we report the percentage of material engagements by subtopic. The engagement topics are based on the SASB Materiality Map™.

Table

	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	Total	Material (%)
Environment	101	44	290	125	398	250	81	103	452	151	226	94	188	109	2612	83.31
Carbon emissions	34	11	197	32	13	6	36	41	403	14	10	14	37	36	884	79.41
Environment	9	9	15	21	316	172	6	21	13	49	157	9	14	10	821	100.00
Water stress		2	56	8	4	9	13	17	5	37	19	16	17	6	209	72.73
Biodiversity and land use	38	2	6	13	37	7	1	4	5	14	1	2	9	11	150	62.67
Raw material sourcing	7	4	2	7	13	36	13	5	2	4	5	9	25	11	143	80.42
Financing environmental impact	3	2	5	38	2	1	6	3	3	1	4	2	14	10	94	100.00
Opportunities in renewable energy	5	9	2	2	1	1	1	7	1	27	1	3	11	5	76	47.37
Product carbon footprint	1	1	2	2	6	7	2	2	1	3	23	6	14	2	72	80.56
Toxic emissions and waste	1		2		4	9	3	1	4		2	6	22	13	67	83.58
Packaging material and waste	1	1	1		1			1		2	2	27	19	4	59	57.63
Climate change vulnerability		2	1	1	1	1		1	15				2	1	25	24.00
Opportunities in clean tech	2	1									2		1		6	50.00
Electronic waste						1							3		4	75.00
Opportunities in green building			1	1											2	100.00
Social	108	60	120	124	92	130	75	96	145	85	70	193	229	343	1870	70.53
Labor management	21	8	11	8	4	9	4	35	41	3	11	28	85	64	332	100.00
Supply chain labor standards	20	8	30	30	12	19	13	10	71	13	6	6	55	26	319	69.88
Product safety and quality	10	5	6	14	12	12	8	7	5	29	9	25	34	103	279	73.98
Health and safety	7	10	6	18	17	45	15	8	3	8	6	4	14	100	261	91.76
Community relations	16	17	16	23	35	16	14	23	18	7	4	3	9	26	227	59.00
Privacy and data security	16	2	3	1	2		9	6	4	5	11	90	5	4	158	45.37
Responsible investment	9	5	30	20	2	2	4	1	2	4	3	3	3	2	90	83.54
Opportunities in nutrition and health	3	3	16	5		13	3	2		6	4	9	5	11	80	61.11
Access to health care	2	2	1	4	4	3	1	2		7	9	14	3	1	53	70.00
Chemical safety			1		1	4	4	1			3	11	4		29	90.57
Controversial sourcing					3	5			1	3	1		9	1	23	68.97
Human capital development						1		1			1		3	3	9	56.52
Access to finance	1			1							2			2	6	77.78
Access to communications	3														3	100.00
Insuring health and demographic risk						1									1	0.00
Governance	88	100	99	127	215	182	270	306	387	154	281	278	224	222	2933	100.00
Total	297	204	509	376	705	562	426	505	984	390	577	565	641	674	7415	86.69

Notes: The table presents the number of engagements by year and topic in A. The engagement year is the year of the first activity within an engagement sequence. In B, we report the percentage of material engagements by subtopic. The engagement topics are based on the MSCI Materiality Map.

Figure 1. Global Overview of Engagements

Notes: The graphs display the number of engagements by country/region of the target firms’ headquarters (A) and the average percentage of the total of listed companies targeted by engagements by country/region (B).

Figure 2. The Number of Engagements and the Materiality of Engagements by Topic over Time

Notes: The figure shows the number of engagements and the percentage of material engagements by the year of their first activity. Panels A–C display engagements on, respectively, environmental, social, and governance topics.

Figure 3. Cumulative Abnormal Returns after Engagements

Notes: The figure displays the cumulative abnormal returns after engagement by materiality and success. In (A), we display the abnormal returns that are calculated by deducting the average return of peer firms from the average return of target firms in each month. In the month before engagement, we buy an equally weighted portfolio of peer firms and plot its cumulative abnormal returns over 18 months after engagement. In (B), we show the cumulative abnormal returns by materiality and success.

Figure 4. Average or Estimated CO₂e Emissions and CO₂e Intensity before and after Engagement

Notes: The figure displays the CO₂e emissions and the CO₂e intensity (CO₂e emissions divided by last year’s sales) by the relative year for the target and peer firms in the samples of Table 8. (A) displays the average CO₂e emissions, (B) displays the average CO₂e intensity, (C) displays the average CO₂e intensity for a highly balanced panel, and (D) shows the estimated CO₂e intensity based on the specification in column 4 of Table 8. t indicates the event year (the engagement year) for target firms and the pseudo-event year (the year of the engagement at the matched target firm) for peer firms.

Table

Variable	Definition	Source
Engagement Specific
MaterialMSCI	Indicator variable equal to 1 when the engagement topic is material following the ESG Industry Materiality Map of MSCI ESG Research and 0 if not	CTI, RT, MSCI
MaterialSASB	Indicator variable equal to 1 when the engagement topic is material following the SASB Standards and 0 if not	CTI, RT, SASB
Material	Indicator variable equal to 1 when the engagement topic is material following both the ESG Industry Materialty Map of MSCI ESG Research and the SASB Standards and 0 if not	CTI, RT, MSCI, SASB
Multiple activities	Indicator variable equal to 1 when the engagement sequence contains multiple activities	CTI, RT
Number of activities	The number of activities in an engagement sequence	CTI, RT
Average method intensity	The average method intensity of an engagement sequence based on its activities. Conferences and seminars receive a score of 1, emails and letters a score of 2, and meetings and calls a score of 3	CTI, RT
Previous success	Indicator variable equal to 1 when the asset manager reached a milestone at the target firm with a previous engagement	CTI, RT
Treatment Indicators
TargetESG/ENV/SOC/GOV	Indicator variable equal to 1 when the firm is targeted for an ESG/ENV/SOC/GOV engagement and 0 if not	CTI, RT
AfterESG/ENV/SOC/GOV	Indicator variable equal to 1 in all years after the first ESG/ENV/SOC/GOV engagement at the target firm and 0 in all years before the first engagement. For peer firms, this variable equals 1 in all years after the pseudo-event year (the year in which the target firm experienced its first engagement)	CTI, RT
Firm Characteristics
MSCIESG/ENV/SOC/GOV	The ESG/ENV/SOC/GOV subscore of MSCI ESG based on all key issues in the target firm’s industry	MSCI
MSCIKI	The MSCI ESG score of the key issue most closely related to the engagement topic	MSCI
ln(CO2eTotal)	The natural logarithm of the target firm’s total scope 1 and 2 CO2e emissions	Refinitiv
ln(CO2eScope1/Scope2)	The natural logarithm of the target firm’s scope 1/scope 2 CO2e emissions	Refinitiv
ln(CO2eIntensity)	The natural logarithm of the target firm’s total scope 1 and 2 CO2e emissions divided by last year’s sales	Refinitiv
ln(CO2eInt.SC1/Int.SC2)	The natural logarithm of the target firm’s scope 1/scope 2 CO2e emissions divided by last year’s sales	Refinitiv
log(size)	The natural logarithm of the firm’s market value	Factset
Tobin’s Q	The book value of total assets plus the firm’s market value, minus the value of common equity, divided by total assets	Factset
Sales growth	The current year’s sales divided by last year’s sales	Factset
log(sales)	The natural logarithm of total sales	Factset
Cumulative return	The cumulative return of the target firm over the previous 12 months	Factset
ROE	The firm’s return on equity	Factset
ROIC	The firm’s return on invested capital	Factset
Opex/assets	The firm’s operating expenses divided by total assets	Factset
Leverage	Total debt divided by total debt plus total equity	Factset
Dividend per share	The firm’s dividend per share	Factset
Capex/sales	The firm’s capital expenditures divided by total sales	Factset
R&D/sales	The firm’s research and development expenses divided by total sales	Factset
Client ownership	The percentage of client ownership in the target firm, where “client” refers to the clients of the reo service in the year of the engagement and BMO Global Asset Management	Factset
Institutional ownership	The percentage of institutional ownership in the target firm	Factset
Inside ownership	The percentage of inside ownership in the target firm	Factset
Institutional block	Indicator variable equal to 1 when the target firm has an institutional blockholder (>5%) and 0 if not	Factset

Notes: This table contains the definitions and sources of the variables used in the analyses. CTI refers to Columbia Threadneedle Investments UK International Limited. RT refers to the research team and is used because engagement specific indicators depend on the manual mapping process of engagements and milestones to the SASB and MSCI frameworks.

Table 1. Engagement Success by Topic and Materiality

	SASB				MSCI
	Total (%)	Material (%)	Immaterial (%)	Dif. (%)	Material (%)	Immaterial (%)	Dif. (%)
Environment	21.86	23.35	18.21	5.15**	21.23	25.00	−3.77
Social	15.61	17.17	13.47	3.71*	17.36	11.43	5.93**
Leadership and governance	18.41	20.28	15.36	4.92*
Governance (traditional)	20.90	23.32			20.90
Total	19.91	21.52	15.13	6.39**	19.77	17.43	2.34**

Notes: The table presents the percentage of successful engagements by topic and SASB/MSCI materiality. The Dif. column displays the difference in success rates between material and immaterial engagements in percentage points. The table does not include an examination of material vs. immaterial governance engagements based on the MSCI materiality map because all governance engagements are considered material by MSCI. Statistical significance is based on a t test of equal means (average success rate).

* and ** denote statistical significance at the 5% and 1% levels, respectively.

Table 2. Engagement Success by Year, Industry, and Characteristics

	N	Success (%)	Months (mdn)		N	Success (%)	Months (mdn)
A. Year				B. SASB Industry Group
2007	297	35.69	18.00	Extractives and minerals	1,447	26.40%	15.19
2008	204	34.31	20.37	Financials	943	20.78%	15.93
2009	509	34.18	15.19	Food and beverage	934	17.67%	13.05
2010	376	33.51	9.47	Infrastructure	928	15.84%	15.91
2011	705	24.96	23.08	Resource transformation	708	15.11%	14.17
2012	562	20.11	15.95	Consumer goods	703	19.35%	14.15
2013	426	24.65	14.27	Technology and communications	606	20.79%	14.47
2014	505	24.75	16.11	Health care	488	23.16%	9.14
2015	984	14.84	18.18	Transportation	339	14.75%	14.98
2016	390	12.82	12.87	Services	275	16.36%	10.59
2017	577	15.42	10.78	Renewable resources	44	20.45%	18.35
2018	565	13.45	12.95
2019	641	12.95	7.96
2020	674	5.49	2.60
Total	7415	19.91	14.40
C. Engagement Characteristics
One activity	4211	1.45	0.00
Multiple activities	3204	44.16	15.39
Non-intense method	5119	15.04	14.58
Intense method	2294	30.69	14.17
Alone	3602	14.08	14.96
Collaborative	1663	22.13	17.38

Notes: The table presents (1) the number of engagements, (2) the percentage of engagements that led to a milestone, and (3) the median time in months between the start of the engagement and the day a milestone was reached (for successful engagements). In (A), these success descriptives are split up by year. In (B), the success descriptives are split up by the SASB industry groups, while (C) is divided by engagement characteristics. “One Activity” contains sequences that only have one activity, while “Multiple Activities” contains sequences with two or more activities. “Non-Intense Method” contains sequences with below-median intensity based on the average method used (e.g., meeting > call > letter), while “Intense Method” contains sequences with above-median average method intensity. “Alone” contains non-collaborative sequences, while “Collaborative” contains sequences with engagements in which the asset manager collaborated with other investors and/or stakeholders.

Table 3. Engagement Success, Topics, Duration, and Characteristics by Quartiles of Client Ownership

	Q1	Q2	Q3	Q4
Success	13.44%	20.39%	21.63%	25.07%
A. Topic
Business model and innovation	13.11%	12.94%	15.16%	15.23%
Environment	31.68%	30.74%	27.56%	26.82%
Governance	32.87%	27.45%	26.32%	31.94%
Human capital	4.91%	8.52%	10.68%	8.63%
Leadership and governance	10.09%	10.25%	10.25%	7.08%
Social capital	7.34%	10.09%	10.03%	10.31%
B. Duration
Median until success	12.53	15.39	13.87	14.93
Mean until last activity	6.13	11.64	10.58	11.78
C. Engagement Characteristics
Multiple activities	31.39%	46.98%	47.09%	47.04%
Intense method	20.72%	30.64%	31.62%	38.77%
Alone	66.69%	66.20%	65.42%	73.36%
Material	76.96%	69.96%	66.61%	66.71%

Notes: The table presents the success rates, topics, duration, and characteristics of engagements by quartiles of client ownership. (A) has the distribution of engagement topics. (B) contains the median time until success (i.e., a milestone) and the mean time between the first and last activity in the average sequence within each quartile. Panel C contains the percentage of engagements containing more than one activity, the percentage of intense engagements based on methods, the percentage of engagements that the asset manager conducted alone, and the percentage of material engagements by quartiles of client ownership.

Table 4. The Determinants of Success

	ESG		ENV		SOC		GOV
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
	Logit	AME	Logit	AME	Logit	AME	Logit	AME
MaterialMSCI	−0.273	0.030	−0.734	−0.059	0.076	0.073*
	(0.230)	(0.018)	(0.389)	(0.031)	(0.471)	(0.030)
MaterialSASB	−0.243	0.040**	0.436	0.048*	−1.355*	−0.013	0.909**	0.075**
	(0.321)	(0.012)	(0.508)	(0.022)	(0.666)	(0.025)	(0.328)	(0.027)
MaterialMSCI * MaterialSASB	0.789*		0.127		1.499
	(0.352)		(0.585)		(0.773)
Multiple activities	4.577**	0.418**	4.843**	0.439**	6.177**	0.488**	5.255**	0.433**
	(0.182)	(0.013)	(0.299)	(0.019)	(0.778)	(0.053)	(0.361)	(0.020)
Number of activities	−0.321**	−0.029**	−0.485**	−0.044**	−0.221**	−0.017**	−0.445**	−0.037**
	(0.048)	(0.004)	(0.107)	(0.009)	(0.058)	(0.004)	(0.104)	(0.008)
Average method intensity	0.646**	0.059**	1.107**	0.100**	0.454	0.036	0.736**	0.061**
	(0.121)	(0.011)	(0.246)	(0.022)	(0.315)	(0.025)	(0.199)	(0.016)
Previous success	0.052*	0.005*	0.078	0.007	−0.013	−0.001	0.049	0.004
	(0.026)	(0.002)	(0.054)	(0.005)	(0.048)	(0.004)	(0.056)	(0.005)
Client ownership	0.070	0.006	−0.016	−0.001	0.399	0.031	0.088	0.007
	(0.101)	(0.009)	(0.242)	(0.022)	(0.257)	(0.020)	(0.139)	(0.011)
MSCIKI	0.002	0.000	0.060	0.005	−0.142	−0.011	−0.059	−0.005
	(0.027)	(0.002)	(0.058)	(0.005)	(0.091)	(0.007)	(0.048)	(0.004)
log(size)	0.133*	0.012*	0.053	0.005	0.467**	0.037**	0.161	0.013
	(0.053)	(0.005)	(0.114)	(0.010)	(0.130)	(0.010)	(0.091)	(0.007)
Tobin’s Q	−0.041	−0.004	−0.027	−0.002	0.067	0.005	−0.084	−0.007
	(0.061)	(0.006)	(0.129)	(0.012)	(0.134)	(0.011)	(0.095)	(0.008)
Sales growth	0.001	0.000	0.000	0.000	0.011	0.001	−0.001	−0.000
	(0.003)	(0.000)	(0.005)	(0.000)	(0.007)	(0.001)	(0.004)	(0.000)
Cumulative return	0.340*	0.031*	0.882**	0.080**	0.066	0.005	−0.220	−0.018
	(0.169)	(0.015)	(0.329)	(0.030)	(0.389)	(0.031)	(0.305)	(0.025)
ROE	−0.003	−0.000	−0.009	−0.001	−0.007	−0.001	0.001	0.000
	(0.003)	(0.000)	(0.008)	(0.001)	(0.007)	(0.001)	(0.005)	(0.000)
Leverage	−0.004	−0.000	0.005	0.000	0.007	0.001	−0.011*	−0.001*
	(0.003)	(0.000)	(0.006)	(0.001)	(0.007)	(0.001)	(0.004)	(0.000)
Dividend per share	−0.056	−0.005	0.041	0.004	−0.088	−0.007	−0.155	−0.013**
	(0.033)	(0.003)	(0.063)	(0.006)	(0.093)	(0.007)	(0.047)	(0.004)
Capex/sales	−0.003	−0.000	−0.010	−0.001	−0.007	−0.001	−0.001	−0.000
	(0.005)	(0.000)	(0.008)	(0.001)	(0.012)	(0.001)	(0.008)	(0.001)
Institutional ownership	0.007	0.001	−0.000	−0.000	0.008	0.001	0.014	0.001
	(0.005)	(0.000)	(0.009)	(0.001)	(0.011)	(0.001)	(0.009)	(0.001)
Inside ownership	0.005	0.000	0.010	0.001	−0.007	−0.001	0.004	0.000
	(0.004)	(0.000)	(0.008)	(0.001)	(0.012)	(0.001)	(0.007)	(0.001)
Institutional block	−0.265*	−0.024*	−0.232	−0.021	−0.629*	−0.050*	−0.116	−0.010
	(0.127)	(0.012)	(0.246)	(0.022)	(0.321)	(0.025)	(0.226)	(0.019)
Constant	−4.362**		−7.470**		−9.478**		−4.195*
	(1.151)		(2.026)		(2.398)		(1.764)
MaterialMSCI (MaterialSASB = 0)		−0.024		−0.065		0.006
		(0.020)		(0.035)		(0.038)
MaterialMSCI (MaterialSASB = 1)		0.046*		−0.057		0.110**
		(0.023)		(0.042)		(0.039)
MaterialSASB (MaterialMSCI = 0)		−0.021		0.042		−0.093*
		(0.028)		(0.049)		(0.041)
MaterialSASB (MaterialMSCI = 1)		0.049**		0.049*		0.012
		(0.013)		(0.025)		(0.030)
Year/industry/country controls	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Pseudo R^2	0.429		0.464		0.512		0.500
N	5281	5281	1655	1655	1188	1188	2027	2027

Notes: The table displays the determinants of reaching a milestone based on target firm and engagement characteristics in the year before the start of the sequence. The dependent variable for all models is Success, which equals 1 for engagements that ended with a milestone and 0 for engagements that did not (yet). All other definitions of variables are in Appendix C. Columns (1), (3), (5), and (7) hold the results for nonlinear (logit) models, while columns (2), (4), (6), and (8) display the average marginal effects resulting from the logit models. At the bottom of the table, we present the average marginal effect of an engagement being material on success based on the framework used (SASB or MSCI).

* and ** denote statistical significance at the 5% and 1% levels, respectively. Standard errors are robust.

Table 5. Average Cumulative Abnormal Returns after Engagement

			(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)
			All	Success	No Success	Material	Immaterial	Mat. Success	Immat. Success	Mat. No Success	Immat. No Success
ESG	[0]	Mean	0.097	0.344	0.035	0.231	−0.157	0.335	0.450	0.202	−0.282
		Difference		0.309		0.388		−0.115		0.484
	[0,6]	Mean	0.441	0.790	0.355	0.445	−0.265	0.472	2.380	0.438	−0.808
		Difference		0.435		0.710		−1.908		1.247
	[0,14]	Mean	0.344	1.870	−0.032	0.695	−2.159	2.543*	0.926	0.186	−2.793**
		Difference		1.902		2.854*		1.617		2.979*
		Observations	5478	1085	4393	3810	786	823	134	2987	652
E	[0]	Mean	0.387	0.505	0.357	0.394	0.214	0.137	1.986	0.464	−0.387
		Difference		0.148		0.180		−1.849		0.850
	[0,6]	Mean	1.693**	1.320	1.788**	1.744*	1.228	0.823	4.473	1.992*	0.127
		Difference		−0.468		0.516		−3.650		1.865
	[0,14]	Mean	1.211	1.503	1.136	0.718	0.557	1.679	1.275	0.459	0.314
		Difference		0.367		0.160		0.404		0.144
		Observations	1866	380	1486	1186	237	252	60	934	177
S	[0]	Mean	−0.341	−0.038	−0.406	0.104	−0.437	0.369	−1.449	0.032	−0.269
		Difference		0.368		0.542		1.817		0.301
	[0,6]	Mean	0.180	1.963	−0.199	0.081	0.245	1.927	1.960	−0.421	−0.041
		Difference		2.162		−0.164		−0.033		−0.380
	[0,14]	Mean	−0.684	0.370	−0.908	−0.072	−1.933	2.997	−2.116	−0.907	−1.902
		Difference		1.278		1.860		5.112		0.995
		Observations	1444	253	1191	697	308	149	44	548	264
G	[0]	Mean	0.138	0.423	0.063	0.176	−0.164	0.441	0.164	0.102	−0.210
		Difference		0.359		0.340		0.278		0.312
	[0,6]	Mean	−0.462	−0.313	−0.501	−0.222	−2.384	−0.251	−1.190	−0.214	−2.554
		Difference		0.188		2.162		0.939		2.340
	[0,14]	Mean	0.284	3.017*	−0.436	0.959	−5.119*	2.899*	4.688	0.416	−6.513**
		Difference		3.454**		6.078*		−1.790		6.929**
		Observations	2168	452	1716	1927	241	422	30	1505	211

Notes: The table presents the cumulative abnormal returns (R_TargetFirm-R_PeerFirm) for intervals (in months) [0], [0,6], and [0,14]. Month 0 is defined as the month of the first activity within an engagement. The Difference rows present the differences in means between columns (2)/(3), (4)/(5), (5)/(6), and (7)/(8) that comprise success vs. no success, material vs. immaterial, material success vs. immaterial success, and material no success vs. immaterial no success, respectively. Significance stars indicate whether an average cumulative abnormal return or difference in means is different from zero.

* and ** denote statistical significance at the 5% and 1% levels, respectively.

Table 6. The Effect of Being Targeted by an (Im)Material Engagement on Subsequent Firm Accounting Performance

	(1)	(2)	(3)	(4)	(5)	(6)
	ROE	ROIC	Opex/Assets	log(Sales)	Capex/Sales	R&D/Sales
TargetESG * AfterESG (Material = 0)	4.871	1.133	0.855	0.034	0.406	−0.253
	(3.036)	(1.429)	(2.721)	(0.053)	(3.300)	(0.337)
TargetESG * AfterESG (Material = 1)	0.734	0.456	−1.389	0.011	0.379	−0.623
	(0.566)	(0.305)	(0.747)	(0.014)	(0.689)	(0.352)
N	23,448	23,624	23,454	23,460	23,453	12,105
TargetGOV * AfterGOV (Material = 0)	1.427	2.069	3.196	0.018	1.417	−2.416**
	(1.986)	(1.182)	(3.564)	(0.058)	(1.432)	(0.833)
TargetGOV * AfterGOV (Material = 1)	1.755**	0.831*	−2.471**	0.023	−0.183	−0.901*
	(0.653)	(0.353)	(0.776)	(0.016)	(0.644)	(0.446)
N	19,143	19,286	19,153	19,159	19,157	9716
TargetSOC * AfterSOC (Material = 0)	3.954	0.770	0.440	0.064	0.645	0.472
	(2.537)	(1.115)	(2.638)	(0.041)	(1.715)	(0.764)
TargetSOC * AfterSOC (Material = 1)	2.709	0.385	1.861	0.044	−2.325	−1.443*
	(1.411)	(0.791)	(1.865)	(0.028)	(1.409)	(0.621)
N	6681	6746	6686	6688	6687	3941
TargetENV * AfterENV (Material = 0)	3.996	1.638	−0.588	0.075	0.747	1.207
	(2.687)	(1.374)	(2.680)	(0.053)	(3.011)	(0.700)
TargetENV * AfterENV (Material = 1)	−0.852	−0.149	−0.933	−0.005	2.170*	0.458*
	(0.798)	(0.476)	(1.222)	(0.020)	(1.081)	(0.207)
N	11,385	11,475	11,383	11,386	11,385	6514
Firm FE	Yes	Yes	Yes	Yes	Yes	Yes
Year controls	Yes	Yes	Yes	Yes	Yes	Yes
Firm controls	Yes	Yes	Yes	Yes	Yes	Yes

Notes: The table displays the effect of being targeted on accounting performance relative to peer firms using a difference-in-differences model. To distinguish between material and immaterial engagements, we include a triple interaction term (Target × After × Material) and an interaction term After × Material. In this table, we present the estimated treatment (targeting) effects by materiality. The outcome variables are ROE, ROIC, opex/assets, log(sales), capex/sales, and R&D/sales. Target equals 1 for target firms and 0 for peer firms. After equals 1 in all years after the event year (i.e., the first year a firm is targeted). For peer firms, it equals 1 in all years after the matched target firm’s event year. For each firm, we keep the 5 years before and after the event year. All models include time-varying firm controls and firm and year fixed effects.

* and ** denote statistical significance at the 5% and 1% levels, respectively. Standard errors are robust.

Table 7. The Effect of Being Targeted on MSCI ESG Scores

	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
	ESG	GOV	SOC	ENV	MSCIKI	KIGOV	KISOC	KIENV
AfterESG	−0.084*				−0.136*
	(0.037)				(0.057)
TargetESG × AfterESG	0.188**				0.077
	(0.055)				(0.078)
AfterGOV		0.018				−0.013
		(0.053)				(0.064)
TargetGOV × AfterGOV		0.011				−0.007
		(0.064)				(0.008)
AfterSOC			0.012				0.178
			(0.052)				(0.098)
TargetSOC × AfterSOC			−0.039				−0.095
			(0.071)				(0.142)
AfterENV				0.018				−0.115
				(0.053)				(0.071)
TargetENV × AfterENV				0.169*				0.169
				(0.072)				(0.102)
log(size)	0.176**	0.033	0.253**	0.234**	0.089	0.021	0.211	0.249**
	(0.040)	(0.047)	(0.060)	(0.046)	(0.059)	(0.069)	(0.116)	(0.070)
Tobin’s Q	−0.051	−0.036	−0.009	0.062	−0.001	−0.087*	−0.007	0.057
	(0.028)	(0.030)	(0.028)	(0.032)	(0.034)	(0.041)	(0.050)	(0.043)
Sales growth	−0.000	−0.000	−0.001	−0.000	0.000	−0.001	0.002*	−0.001
	(0.000)	(0.000)	(0.000)	(0.000)	(0.000)	(0.001)	(0.001)	(0.001)
ROE	0.001	0.003**	−0.003**	−0.001	−0.000	0.004**	−0.003	−0.002
	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)
Leverage	−0.001	−0.002	0.000	0.002	−0.001	−0.002	−0.002	0.000
	(0.001)	(0.002)	(0.001)	(0.002)	(0.002)	(0.002)	(0.003)	(0.002)
Dividend per share	0.015*	0.008	−0.010	−0.003	−0.027	−0.079**	0.093	−0.001
	(0.007)	(0.011)	(0.020)	(0.014)	(0.023)	(0.016)	(0.074)	(0.040)
Capex/sales	−0.000	−0.000	−0.002	0.001	−0.001	−0.002	−0.001	−0.000
	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.002)	(0.001)
Client ownership	0.010	−0.030	0.084	−0.083	−0.044	−0.043	0.136	0.016
	(0.049)	(0.054)	(0.065)	(0.065)	(0.069)	(0.080)	(0.113)	(0.109)
Institutional ownership	0.005*	0.003	0.004	0.001	0.000	−0.006	0.005	−0.000
	(0.002)	(0.002)	(0.002)	(0.002)	(0.003)	(0.003)	(0.005)	(0.003)
Inside ownership	−0.005**	−0.009**	0.005	−0.004	−0.005	−0.011**	0.003	−0.003
	(0.002)	(0.002)	(0.002)	(0.003)	(0.003)	(0.003)	(0.005)	(0.004)
Institutional block	−0.019	−0.077	0.053	−0.057	−0.050	−0.048	0.018	−0.073
	(0.036)	(0.046)	(0.048)	(0.047)	(0.053)	(0.066)	(0.100)	(0.062)
Constant	3.367**	5.636**	2.895**	2.545**	4.330**	7.179**	2.443*	2.212**
	(0.344)	(0.421)	(0.545)	(0.429)	(0.523)	(0.589)	(1.161)	(0.644)
Firm FE	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Year controls	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Adjusted R^2	0.712	0.454	0.645	0.682	0.617	0.592	0.721	0.680
N	27,204	19,160	9752	14,627	18,254	12,739	4324	10,769

Notes: The table displays the effect of being targeted on MSCI ESG scores relative to peer firms using a difference-in-differences model. The outcome variables are the MSCI subcategory scores based on the engagement topic. Target equals 1 for target firms and 0 for peer firms. After equals 1 in all years after the event year (i.e., the first year a firm is targeted). For peer firms, it equals 1 in all years after the matched target firm’s event year. All definitions of variables are in Appendix C. For each firm, we keep the five years before and after the event year. All models include firm and year fixed effects.

* and ** denote statistical significance at the 5% and 1% levels, respectively. Standard errors are robust.

Table 8. The Effect of Being Targeted by an Environmental Engagement on Corporate Emissions

	(1)	(2)	(3)	(4)	(5)	(6)
	ln(CO2eTotal)	ln(CO2eScope1)	ln(CO2eScope2)	ln(CO2eIntensity)	ln(CO2eInt.SC1)	ln(CO2eInt.SC2)
AfterENV	0.003	−0.025	−0.050	0.093**	0.047	0.007
	(0.028)	(0.040)	(0.044)	(0.026)	(0.039)	(0.042)
TargetENV × AfterENV	0.022	0.021	0.091	−0.117**	−0.090	−0.023
	(0.037)	(0.050)	(0.056)	(0.033)	(0.047)	(0.053)
log(size)	0.130**	0.236**	0.178**	−0.158**	−0.058	−0.120**
	(0.028)	(0.038)	(0.041)	(0.025)	(0.036)	(0.038)
Tobin’s Q	0.071**	−0.121**	−0.113**	0.006	−0.036	−0.025
	(0.019)	(0.023)	(0.026)	(0.016)	(0.021)	(0.024)
Sales growth	−0.000	−0.000	−0.001*	−0.001**	−0.001*	−0.001**
	(0.000)	(0.000)	(0.000)	(0.000)	(0.000)	(0.000)
ROE	−0.000	−0.001	−0.000	0.001	−0.000	0.001
	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)
Leverage	0.004**	0.004**	0.006**	0.002*	0.002*	0.002
	(0.001)	(0.001)	(0.002)	(0.001)	(0.001)	(0.002)
Dividend per share	0.003	0.005	−0.005	−0.011	−0.014	−0.028*
	(0.002)	(0.004)	(0.005)	(0.008)	(0.008)	(0.012)
Capex/sales	−0.003**	−0.003**	−0.004**	0.002*	0.002	0.001
	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)
Client ownership	0.105**	0.062*	0.098*	0.075	0.044	0.084
	(0.037)	(0.031)	(0.042)	(0.039)	(0.032)	(0.045)
Institutional ownership	−0.002	−0.004*	−0.001	0.002	−0.001	0.002
	(0.001)	(0.002)	(0.002)	(0.001)	(0.002)	(0.002)
Inside ownership	−0.003	−0.000	0.003	0.000	0.003	0.007
	(0.002)	(0.003)	(0.004)	(0.002)	(0.003)	(0.003)
Institutional block	0.018	0.056*	−0.004	0.028	0.069*	0.023
	(0.021)	(0.032)	(0.036)	(0.021)	(0.033)	(0.035)
Constant	12.341**	10.517**	10.692**	5.871**	4.051**	4.272**
	(0.256)	(0.355)	(0.411)	(0.232)	(0.341)	(0.378)
Firm FE	Yes	Yes	Yes	Yes	Yes	Yes
Year controls	Yes	Yes	Yes	Yes	Yes	Yes
Adjusted R^2	0.949	0.948	0.890	0.947	0.945	0.859
N	11099	9498	9216	11095	9493	9213

Notes: The table displays the effect of being targeted by an environmental engagement on corporate emissions relative to peer firms using a difference-in-difference model. The outcome variables are the log transformations of total/scope 1/scope 2 CO₂e emissions or their intensity (CO₂e emissions divided by last year’s sales). Target equals 1 for target firms and 0 for peer firms. After equals 1 in all years after the event year (i.e., the first year a firm is targeted). For peer firms, it equals 1 in all years after the matched target firm’s event year. All definitions of variables are in Appendix C. For each firm, we keep the five years before and after the event year. All models include firm and year fixed effects.

* and ** denote statistical significance at the 5 and 1% levels, respectively. Standard errors are robust.

Table 9. The Effect of Being Targeted by an Emission Engagement on Corporate Emissions

	(1)	(2)	(3)	(4)	(5)	(6)
	ln(CO2eTotal)	ln(CO2eScope1)	ln(CO2eScope2)	ln(CO2eIntensity)	ln(CO2eInt.SC1)	ln(CO2eInt.SC2)
AfterENV	0.000	0.019	−0.010	0.203**	0.211**	0.161*
	(0.052)	(0.072)	(0.071)	(0.051)	(0.072)	(0.070)
TargetENV × AfterENV	−0.003	−0.063	−0.040	−0.220**	−0.266**	−0.229**
	(0.064)	(0.089)	(0.094)	(0.055)	(0.082)	(0.088)
log(size)	0.121**	0.177**	0.248**	−0.114**	−0.070	−0.011
	(0.043)	(0.055)	(0.059)	(0.039)	(0.054)	(0.055)
Tobin’s Q	−0.107**	−0.138**	−0.186**	−0.026	−0.047	−0.107*
	(0.030)	(0.034)	(0.047)	(0.031)	(0.033)	(0.043)
Sales growth	−0.000	−0.000	−0.000	−0.001	−0.001	−0.001
	(0.000)	(0.001)	(0.001)	(0.000)	(0.001)	(0.001)
ROE	−0.000	−0.001	−0.000	0.001	0.000	0.002
	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)
Leverage	0.003**	0.004*	0.003	0.001	0.001	−0.000
	(0.001)	(0.002)	(0.002)	(0.001)	(0.002)	(0.002)
Dividend per share	0.014	0.027*	0.008	−0.028*	−0.008	−0.042*
	(0.009)	(0.012)	(0.022)	(0.011)	(0.015)	(0.019)
Capex/sales	−0.003**	−0.004**	−0.005**	0.002*	0.002	0.001
	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)	(0.001)
Client ownership	0.115	0.039	0.133	0.089	0.010	0.095
	(0.065)	(0.041)	(0.070)	(0.068)	(0.044)	(0.070)
Institutional ownership	−0.003	−0.003	−0.006	0.001	0.002	−0.003
	(0.002)	(0.003)	(0.004)	(0.002)	(0.003)	(0.004)
Inside ownership	−0.006	−0.001	−0.002	−0.001	0.005	0.002
	(0.004)	(0.006)	(0.007)	(0.003)	(0.005)	(0.006)
Institutional block	0.051	0.075	−0.014	0.058	0.086	0.020
	(0.043)	(0.061)	(0.069)	(0.038)	(0.056)	(0.069)
Constant	13.038**	11.723**	10.776**	6.144**	4.783**	4.094**
	(0.375)	(0.502)	(0.576)	(0.354)	(0.515)	(0.569)
Firm FE	Yes	Yes	Yes	Yes	Yes	Yes
Year controls	Yes	Yes	Yes	Yes	Yes	Yes
Adjusted R^2	0.943	0.937	0.874	0.945	0.940	0.844
N	4545	3900	3683	4542	3898	3681

Notes: The table displays the effect of being targeted by an emission engagement on corporate emissions relative to peer firms using a difference-in-difference model. We define emission engagements as engagements that we mapped to the MSCI categories “carbon emissions,” “product carbon footprint,” and “toxic emissions and waste.” The outcome variables are the log transformations of total/scope 1/scope 2 CO₂e emissions or their intensity (CO₂e emissions divided by last year’s sales). Target equals 1 for target firms and 0 for peer firms. After equals 1 in all years after the event year (i.e., the first year a firm is targeted). For peer firms, it equals 1 in all years after the matched target firm’s event year. All definitions of variables are in Appendix C. For each firm, we keep the five years before and after the event year. All models include firm and year fixed effects.

* and ** denote statistical significance at the 5% and 1% levels, respectively. Standard errors are robust.