Conference Agenda

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Session Overview
Session
Track W8-3: Allocative and Value Effects of ESG
Time:
Wednesday, 22/May/2024:
10:30am - 11:15am

Session Chair: Pedro Matos, University of Virginia Darden School of Business
Discussant: Richard Evans, Darden - University of Virginia
 Location: Room 1203

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Presentations

Discretionary Information in ESG Investing: A Text Analysis of Mutual Fund Prospectuses

Angie Andrikogiannopoulou1, Philipp Krueger2, Shema Frédéric Mitali3, Filippos Papakonstantinou1

1King's College London; 2University of Geneva; 3SKEMA Business School

We construct novel measures of mutual funds’ environmental, social, and governance (ESG) commitment by analyzing the discretionary investment-strategy descriptions of their prospectuses. We find that fund flows respond strongly to text-based ESG measures. Using discrepancies between text- and fundamentals-based ESG measures, we identify greenwashing funds. We find that greenwashing is more prevalent since 2016 (coinciding with the Paris Agreement) and among funds with lower past flows and higher expense ratios, and isn't associated with superior subsequent performance. Furthermore, greenwashers attract similar flows to genuinely green funds, suggesting that investors cannot distinguish them. Our results could help regulators' efforts to combat ESG-related misconduct.


Andrikogiannopoulou-Discretionary Information in ESG Investing-770.pdf