Climate Change and Mutual Fund Voting on Climate Proposals

Alberta Di Giuli | Alexandre Garel | Roni Michaely | Arthur Romec

Aug 26, 2025

Key Takeaways

Research Question: Do fund managers’ personal experiences with climate change influence their voting support for climate-related proposals?
Data & Method: The study combines mutual fund voting data and temperature records from the city where each firm is headquartered. Using a stacked difference-in-differences design based on a sample of 31,453 mutual fund votes on 568 climate proposals from 2006–2022, the authors study whether fund managers increase their voting support for climate-related proposals after being exposed to abnormally hot temperatures (at least 2°C+ above the norm).
Findings: Fund managers exposed to abnormally hot temperatures provide significantly more support for climate proposals. The magnitude of the effect is meaningful: support for climate proposals increases by 11 percentage points, which represents a 40% increase over the average support.
The effect is persistent: up to five years after being exposed to abnormally hot temperatures, fund managers remain significantly more likely to support climate proposals. The effect is also mainly driven by the first exposure.
The effect is specific to climate-related proposals: fund managers exposed to abnormally hot temperatures do not increase their voting support for proposals related to governance or social issues.
The effect is stronger for climate proposals targeting firms with greater climate risk and for high-quality proposals (as measured by positive ISS recommendation or the aggregate voting support for the proposal).
The effect is more pronounced for fund managers with lower awareness on climate issues, that is, for those starting with a lower base of support for (and possibly awareness of) climate-related proposals.
Personal experience with climate change also leads non-index fund managers to divest from stocks with greater climate change exposure. Indexers do not divest but are significantly more likely to increase their voting support for climate proposals, consistent with the idea that they cannot vote with their feet.
Implication: Personal experience with climate change acts as a wake-up call, leading investors to revise their perceptions about climate change and the associated risks.

Source Publication: Di Giuli, A., Garel, A., Michaely, R., & Romec, A. (2025). Climate Change and Mutual Fund Voting on Climate Proposals. Management Science.

Can Exposure to Abnormally Hot Temperatures Change Shareholder Perceptions of Climate Change?

Shareholder voting on climate-related proposals has become an increasingly important channel through which investors can express their concerns and influence their portfolio firms’ climate policies. A growing literature explores the factors influencing investors’ voting support for climate-related proposals. The authors consider the influence of personal experience with climate change.

Climate change is a complex phenomenon that people learn about both abstractly through media and education and concretely through personal experience. Prior research highlights the existence of a local warming effect whereby recent local temperatures influence people’s judgments about climate change. Exposure to abnormally hot temperatures may therefore affect fund managers’ climate beliefs and in turn their voting support for climate-related proposals, as well as their investment decisions.

Data and Method

The authors assemble a dataset of 31,453 mutual fund votes on 568 climate-related shareholder proposals between 2006 and 2022. Combining data on the location of fund headquarters and local temperature records from the Global Surface Summary of Day database, they identify funds that have been exposed to abnormally hot temperatures.

Specifically, a fund manager is considered to have experienced abnormally hot temperatures if, for a given quarter, she has experienced an average deviation from “normal” temperatures that is greater than 2°C. The authors implement a stacked difference-in-differences design. The core idea of this approach is to create event-specific datasets (i.e., cohorts) containing fund votes on climate proposals cast by treated and “clean” control funds. Within each cohort, the authors control for unobserved heterogeneity using proposal and fund fixed effects.

Findings

The authors find funds whose managers have been exposed to abnormally hot temperatures provide significantly higher support for climate proposals. The magnitude of the effect is meaningful: support for climate proposals increases 11 percentage points, representing nearly a 40% increase relative to baseline support levels.

The effect of personal experience with climate change is quite persistent: up to five years after being exposed to abnormally hot temperatures, fund managers remain more likely to support climate-related proposals. This effect is also specific to such proposals: fund managers exposed to abnormally hot temperatures do not change their voting support for proposals related to governance or social issues.

The authors further find the impact of hot temperatures varies significantly based on firm-level climate risk, the quality of the proposals, fund investment strategy, and prior awareness of climate change. The effect is more pronounced for proposals that are better designed or more relevant—such as those targeting companies with high climate risk or those receiving positive recommendations from proxy advisors. Moreover, fund managers with lower historical support for climate proposals (i.e., their base support is low) are more likely to change their voting behavior after being exposed to abnormally hot temperatures.

Fund managers’ personal experience matters for the outcome of climate proposals: the aggregate support climate proposals receive increases with the fraction of mutual funds exposed to abnormally hot temperatures.

Finally, the authors also find personal experience with climate change affects mutual funds’ investment decisions. Non-index funds exposed to abnormally hot temperatures are more likely to divest from stocks with greater climate change exposure. For index funds, the effect on voting behavior is stronger, consistent with the notion that voicing their concerns is more important for passive investors who do not have the ability to vote with their feet by divesting.

Implications

This paper highlights how personal experience with climate change can influence shareholder voice (and exit) on climate issues. The results suggest the accumulation of scientific evidence such as IPCC reports may not be sufficient in pushing market participants to consider climate issues. Perhaps turning off air conditioners and exposing (institutional) shareholders to the abnormally hot temperature can serve as an effective wake-up call leading to greater attention and concerns for climate issues.