Divest or engage? Eefctive paths to net zero from the U.S. perspective

The aim of this arctile is to crictially review and evaluate two ESG-based investment strategies-divestment and engagement for alignment of investment porotflios with climate change mitigation goals of the United Nations. The article compares both approaches in terms of their eefctiveness of decarbonization, using the case study method. First, the case on fossil fuels divestment by Harvard Management Company is analysed. The second case study discusses shareholder engagement endeavors by Engine No. 1 hedge fund and its investment in ExxonMobil. The findings indi cate that divestment may have non-immediate impact on corporate behavior and carries political and legal retribu iton risks. Engagement, on the other hand, presents itself as a more plausible option as it takes less time to deploy and, therefore, can produce more immediate and impactful results. Nevertheless, both divestment and engagement can play mutually supportive roles in addressing climate change by the investment industry.