<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The aim of this article is to critically review and evaluate two ESG-based investment strategies—divestment and engagement for alignment of investment portfolios with climate change mitigation goals of the United Nations. The article compares both approaches in terms of their effectiveness of decarbonization, using the case study method. First, the case on fossil fuels divestment by Harvard Management Company is analysed. The second case study discusses shareholder engagement endeavors by Engine No. 1 hedge fund and its investment in ExxonMobil. The findings indicate that divestment may have non-immediate impact on corporate behavior and carries political and legal retribution risks. Engagement, on the other hand, presents itself as a more plausible option as it takes less time to deploy and, therefore, can produce more immediate and impactful results. Nevertheless, both divestment and engagement can play mutually supportive roles in addressing climate change by the investment industry.</p>
</abstract>

The aim of this article is to critically review and evaluate two ESG-based investment strategies—divestment and engagement for alignment of investment portfolios with climate change mitigation goals of the United Nations. The article compares both approaches in terms of their effectiveness of decarbonization, using the case study method. First, the case on fossil fuels divestment by Harvard Management Company is analysed. The second case study discusses shareholder engagement endeavors by Engine No. 1 hedge fund and its investment in ExxonMobil. The findings indicate that divestment may have non-immediate impact on corporate behavior and carries political and legal retribution risks. Engagement, on the other hand, presents itself as a more plausible option as it takes less time to deploy and, therefore, can produce more immediate and impactful results. Nevertheless, both divestment and engagement can play mutually supportive roles in addressing climate change by the investment industry.

Divest or engage? Effective paths to net zero from the U.S. perspective

Poznań University of Economics and Business, Institute of International Business and Economics

Economics and Business Review

This work is licensed under the Creative Commons Attribution 4.0 International License.

{"article-title":"Divest or engage? Effective paths to net zero from the U.S. perspective"}

The aim of this article is to critically review and evaluate two ESG-based investment strategies—divestment and engagement for alignment of investment...

Divest or engage? Effective paths to net zero from the U.S. perspective

Data publikacji: 01 maj 2023

Zakres stron: 65 - 93

Otrzymano: 19 gru 2022

Przyjęty: 07 kwi 2023

DOI: https://doi.org/10.18559/ebr.2023.1.3

Słowa kluczowe
divestment, engagement, ESG, net zero transition, decarbonization

© 2023 Andrew G. Buks et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Divest or engage? Effective paths to net zero from the U.S. perspective

Data publikacji: 01 maj 2023

Zakres stron: 65 - 93

Otrzymano: 19 gru 2022

Przyjęty: 07 kwi 2023

DOI: https://doi.org/10.18559/ebr.2023.1.3

Słowa kluczowedivestment, engagement, ESG, net zero transition, decarbonization

© 2023 Andrew G. Buks et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Słowa kluczowe
divestment, engagement, ESG, net zero transition, decarbonization