This study finds that index provider engagement can impact corporate climate policies. The study randomly selected 300 out of 1227 international companies, and sent them letters encouraging the commitment to setting science-based climate targets, telling them that failure to do so could mean exclusion from benchmark indices. After one year, a significant effect was observed as 21% of treated companies committed to setting a science-based climate target, vs. 15.7% in the control group. The main ESG issues discussed in the report are the efficacy of index provider engagement, shareholder activism, and the societal impact of finance.

This study suggests that index provider engagement can affect corporate policies, providing that a feasible request is combined with a credible threat of exclusion. This also shows that passive investors can be active stewards for climate action. Secondly, it suggest that investment funds and indices with existing ESG tilts and screens in place may be able to enhance their societal impact by engaging with companies proactively. The findings of this report are based on qualitative and quantitative data from a pre-registered field experiment and, therefore, carry significant weight.

It is important to note that this study investigated a specific case where the request to commit to setting a science-based climate target served as a low-cost easy step that costs little. Moreover, the request was directly addressed to the chairperson of the board and signed by the CEO, rather than less senior personnel. Therefore it is important to use these insights with regard for the limitations of the study