N°25-76: Institutional Investor Engagement: From Climate to Nature Risks

Institutional investors can use engagement strategies to affect corporate responses to climate and nature risks. Engagement improves climate-related disclosure and sometimes reduces emissions. However, persistently high emissions among major polluters and carbon leakage through divestitures or outsourcing raise doubts about investors' ultimate effect on economywide decarbonization. Collective investor initiatives may enhance engagement, yet evidence remains limited on their effectiveness. Recent extensions of engagement efforts to nature topics reflect the interconnectedness of nature and climate risks. Open research questions point to a rich agenda for understanding better how, why, and with what effects institutional investors engage on climate and nature risks.