Revisiting the Big Three and their role in global corporate carbon emissions

Abstract

Emissions from listed companies are responsible for 40% of global greenhouse gas emissions (Preston & Ward, 2021), which makes investors a critical change agent in the transition to a net zero economy. We examine the role of the three biggest institutional investors, the Big Three (Blackrock, Vanguard and State Street), on the reduction of corporate carbon emissions. The Big Three represent some of the largest owners of US listed companies and thus could have substantial voting power and influence over firms’ emissions. Using methodologies from Azar et al.’s (2021) original Big Three study, we find that the Big Three are associated with reduced corporate carbon emissions from 2014-2022. We do not find that the association between the Big Three and emission reductions have increased over time, nor do we find evidence that larger Big Three holdings result in larger emission reductions. These last two findings are contrary to Azar et al.’s (2021) results, and we hypothesize that the differences are due to our broader firm coverage, exclusion of estimated data from our sample, and our use of more appropriate fixed effects.