Beyond “One-Size-Fits-All”: Organizing Collaborative Shareholder Engagements on Climate Change

We study collaborative shareholder engagements on climate change issues coordinated by the United Nations-supported Principles for Responsible Investment (PRI). These engagements involve collaboration among coalitions of institutional investors seeking behind-the-scenes dialogue with target firms to encourage improved environmental sustainability practices. Whereas previous studies have focused on individual factors and their net effects on successful engagements, little is known about how these factors combine to simultaneously affect engagement outcomes. Drawing on a unique dataset of 553 climate change engagements coordinated by the PRI between 2008 and 2019, and combining a configurational approach—fuzzy-set Qualitative Comparative Analysis (fsQCA)—with a regression framework, we develop an emerging “tailor-to-target” theory of collaborative shareholder engagement. Our results show that successful investor coalitions combine different engagement levers into configurations (or “recipes”) tailored to fit the characteristics and environmental predispositions of the target firm. Our theory and evidence extend the stakeholder salience framework by highlighting the interactions among firm capacity, investor coalition attributes, and the focal engagement issue in successful engagement, while also contributing to studies of external corporate governance by moving beyond a “one-size-fits-all” approach. Our findings have key practical implications for investors, engagement organizations, and policymakers who seek to shape firms’ climate change behaviors through the adoption of environmentally sustainable practices.