What drives corporate ESG? Disentangling the importance of investors and managers

Vicente J. Bermejo; Antonino Emanuele Rizzo; Mohammed Zakriya

doi:10.1016/j.jfi.2026.101194

What drives corporate ESG? Disentangling the importance of investors and managers

Vicente J. Bermejo
, Antonino Emanuele Rizzo^*
, Mohammed Zakriya

^*Corresponding author for this work

Research output: Indexed journal article › Article › peer-review

Abstract

We study the relative importance of institutional investors and managers for corporate ESG policies. We find that investor effects are the strongest predictors of ESG performance. This result holds across individual ESG dimensions, and it is particularly pronounced for the environmental dimension. Long-term investors and those headquartered in Democratic-leaning states are most strongly associated with higher ESG performance. Additional analyses indicate that both investor selection and influence channels are at play. Overall, our findings highlight the central role of institutional investors for corporate ESG outcomes.

Original language	English
Article number	101194
Number of pages	14
Journal	Journal of Financial Intermediation
Volume	65
DOIs	https://doi.org/10.1016/j.jfi.2026.101194
Publication status	Published - Jan 2026

Keywords

Csr
Esg
Institutional investors
Investor fixed effects
Manager fixed effects

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10.1016/j.jfi.2026.101194

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title = "What drives corporate ESG? Disentangling the importance of investors and managers",

abstract = "We study the relative importance of institutional investors and managers for corporate ESG policies. We find that investor effects are the strongest predictors of ESG performance. This result holds across individual ESG dimensions, and it is particularly pronounced for the environmental dimension. Long-term investors and those headquartered in Democratic-leaning states are most strongly associated with higher ESG performance. Additional analyses indicate that both investor selection and influence channels are at play. Overall, our findings highlight the central role of institutional investors for corporate ESG outcomes.",

keywords = "Csr, Esg, Institutional investors, Investor fixed effects, Manager fixed effects",

author = "Bermejo, \{Vicente J.\} and Rizzo, \{Antonino Emanuele\} and Mohammed Zakriya",

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year = "2026",

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doi = "10.1016/j.jfi.2026.101194",

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AU - Zakriya, Mohammed

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N2 - We study the relative importance of institutional investors and managers for corporate ESG policies. We find that investor effects are the strongest predictors of ESG performance. This result holds across individual ESG dimensions, and it is particularly pronounced for the environmental dimension. Long-term investors and those headquartered in Democratic-leaning states are most strongly associated with higher ESG performance. Additional analyses indicate that both investor selection and influence channels are at play. Overall, our findings highlight the central role of institutional investors for corporate ESG outcomes.

AB - We study the relative importance of institutional investors and managers for corporate ESG policies. We find that investor effects are the strongest predictors of ESG performance. This result holds across individual ESG dimensions, and it is particularly pronounced for the environmental dimension. Long-term investors and those headquartered in Democratic-leaning states are most strongly associated with higher ESG performance. Additional analyses indicate that both investor selection and influence channels are at play. Overall, our findings highlight the central role of institutional investors for corporate ESG outcomes.

KW - Csr

KW - Esg

KW - Institutional investors

KW - Investor fixed effects

KW - Manager fixed effects

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U2 - 10.1016/j.jfi.2026.101194

DO - 10.1016/j.jfi.2026.101194

M3 - Article

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VL - 65

JO - Journal of Financial Intermediation

JF - Journal of Financial Intermediation

M1 - 101194

ER -

What drives corporate ESG? Disentangling the importance of investors and managers

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Keywords

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