When Green Investments Pay Off
In building a portfolio, sustainability is no longer a luxury good. But it’s not a slam dunk either.
When Green Investments Pay OffPaper Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows
Examining a shock to the salience of the sustainability of the U.S. mutual fund market, we present causal evidence that investors marketwide value sustainability: being categorized as low sustainability resulted in net outflows of more than $12 billion while being categorized as high sustainability led to net inflows of more than $24 billion. Experimental evidence suggests that sustainability is viewed as positively predicting future performance, but we do not find evidence that high鈥恠ustainability funds outperform low鈥恠ustainability funds. The evidence is consistent with positive affect influencing expectations of sustainable fund performance and nonpecuniary motives influencing investment decisions.
Published in: Journal of Finance
- Authored by
- 2019
- ESG/CSR
Read the Research in Chicago Booth Review