Investor Activism: Driving Corporate Climate Action Through Finance

In an era of escalating climate risks and political debates over ESG, investor activism emerges as a pivotal financial lever pushing companies to accelerate decarbonization and sustainable innovation. By wielding capital, votes, and policy influence, institutional investors are reshaping corporate strategies to align with global climate goals.

Why climate is now a core financial issue for investors

The 2025 Global State of Investor Climate Action report surveyed over 220 large asset owners and managers, finding that the financial materiality of climate risk is now “well-understood by institutional investors.” This shift reframes climate change as a core risk/return driver rather than a peripheral moral cause.

Investors recognize three dimensions of climate risk and opportunity:

• Physical risk – extreme weather events, supply chain disruptions, asset damage.
• Transition risk – carbon pricing, regulatory shifts, potential stranded assets.
• Opportunity – clean energy, climate tech, resilience infrastructure investments that deliver growth.

Three-quarters of investors now assess climate-related risks and have board-level oversight of climate strategy, reflecting that climate considerations are integral to governance and fiduciary duty standards. Ignoring these material risks can expose portfolios to legal challenges and underperformance.

Investor climate action: what investors are actually doing

Investors are translating awareness into four major action pillars, as detailed in the 2025 Investor Agenda report.

• Investment & capital allocation: 70% of investors report climate solutions investments, yet only 30% have committed to increasing these allocations. Barriers include policy uncertainty, data gaps, and deal pipelines in emerging markets.
• Corporate engagement & voting: 73% engage portfolio companies through shareholder resolutions, direct dialogues, and the threat of reputational damage via votes against directors over climate failures.
• Policy advocacy: 43% engage with governments for net-zero-aligned regulation, carbon pricing, and mandatory disclosures, leveraging statements like the Global Investor Statement to Governments on the Climate Crisis.
• Targets, transition plans, and disclosure: 65% track portfolio emissions, 56% disclose transition plans, and 51% adopt net-zero targets by 2050, with nature-related disclosures and just transition considerations gaining traction.

This normalization of climate integration across the investment chain highlights both progress and gaps: incomplete coverage of assets, weak interim targets, and regional disparities in ambition and transparency.

How investor activism shows up at company level

Shareholder proposals and proxy season dynamics are barometers of investor pressure. In the U.S., ESG resolutions dropped from 527 to 355 by mid-February 2025, and average support fell from 33.3% in 2021 to 19.6% in 2024. Despite this backlash phase of ESG, climate remains the single largest category of proposals.

Concrete examples from the 2025 Proxy Preview illustrate tactics and focus areas:

• Constellation Brands: Proposal demanding a full value-chain GHG emissions reduction plan aligned with the Paris Agreement, including scenario analysis and science-based targets.
• Southern Company: Request to disclose assumptions behind its continued reliance on fossil fuel generation versus renewables expansion.
• Allstate: Resolution on measuring, disclosing, and reducing underwritten and invested emissions to align with a 1.5°C pathway.
• Verizon: Inquiry into whether corporate lobbying and political influence align with its stated climate targets and commitments.
• As You Sow: One of the most active filers, representing investors across dozens of climate-focused resolutions at Amazon, Google, Coca-Cola, and others.

These actions leverage direct dialogue, reputational leverage, and voting power to compel boards to enhance transparency, set robust targets, and implement transition plans.

Broader activism landscape and ESG backlash

Activism campaigns in the Russell 3000 have more than tripled since 2018, peaking at over 400 in 2024 before easing to 300 in 2025, according to The Conference Board. S&P Global reports a 45% growth in ESG campaigns between H1 2020 and H1 2024, reflecting heightened environmental and social scrutiny.

The landscape is further complicated by a surge in “anti-ESG” proposals challenging climate policies as politically driven or value-destroying. This polarization with pro-climate and anti-ESG investors forces companies to navigate competing pressures and choose how publicly to champion sustainability.

Corporate response: retreat, resilience, or “greenhushing”?

A Harvard Business Review study of 75 major global firms finds that only 8% materially rolled back climate commitments, while another 5% toned down messaging but kept programs intact. Over half held their commitments steady and nearly one-third expanded efforts, showing that claims of a mass corporate retreat from climate commitments are overstated.

Companies today face three strategic paths:

• Retreat: scaling back targets or delaying investments under political pressure.
• Greenhushing: maintaining internal initiatives while reducing public disclosures to avoid backlash.
• Resilience: doubling down on transparent, science-based plans and stakeholder engagement.

For investors seeking to maintain momentum, practical steps include:

• Building coalitions with like-minded investors to amplify engagement impact.
• Using data-driven insights to benchmark company performance and hold boards accountable.
• Aligning proxy votes with long-term climate goals rather than short-term gains.
• Advocating for standardized disclosure frameworks to reduce data gaps and regional disparities.

By sustaining active engagement, leveraging governance tools, and advocating robust policy frameworks, investors can ensure that sustainability remains firmly embedded in corporate strategies and that the global transition to net zero continues to gain pace. Accelerate the transition to net zero by using the full arsenal of financial levers to drive meaningful climate action.