What drives sustainable institutional engagement and voting behavior?
- We examine what drives institutional engagement and voting on environmental, social, and governance (ESG)-related shareholder proposals, using data from Principles for Responsible Investment (PRI) and Morningstar. We find that personal engagement often substitutes for voting, especially among large fund families and those using meetings or site visits. Funds that vote more often or disclose less are less supportive of ESG proposals, while those filing proposals or outsourcing votes show more support. Collaborative engagement and longer PRI membership correlate with stronger ESG voting. Though engagement-active funds don't show major ESG performance gains, they increasingly support firms’ ESG improvements, highlighting the role of active ownership in promoting sustainability.
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