Institutional investors as environmental activists

Abstract

ABSTRACT Climate change mitigation has presented a serious problem for global regulators. An area that is emerging from a collection of legislative initiatives of the European Commission is the role of institutional investors in holding companies accountable for decisions that have a climate change impact. These legislative initiatives are the Revised Shareholder Rights Directive, Disclosures Regulation, Taxonomy Regulation and Revised Benchmarks Regulation. The article analyses each piece of legislation critically and seeks to describe their cumulative effect in terms of what is required of institutional investors. This article argues that these legislative initiatives will, together, create a normative expectation that institutional investors adopt, to a greater extent than has been previously observed, the role of activist with respect to the climate change impacts of investee companies. The article then describes the possibility of enforcement of this normative expectation by non-State actors.