Spotting portfolio greenwashing in environmental funds
Spotting portfolio greenwashing in environmental funds
This paper examines greenwashing practices in sustainable funds. We utilize a unique
data set of US equity mutual fund holdings between 2012 and 2021 to calculate the sustainable
funds’ carbon footprint. We then use a Difference-in-Differences analysis to measure
how much the carbon footprint of sustainable funds changes after announcing their commitment to sustainability. The results show that sustainable funds fail to reduce their carbon
footprint relative to a matched group of conventional funds. Using an event study, we also
find that sustainable fund flows significantly increase in response to fund announcements.
This provides evidence of greenwashing in sustainable funds which raises concerns about
their fiduciary duty. Our findings also indicate that greenwashers tend to be underperforming
funds with relatively low flows which then announce their commitment to sustainable
investing to attract investor inflows.
Abouarab, Rabab Samir
50ef9914-0c61-4b62-bade-0cd46400fa09
Mishra, Tapas
218ef618-6b3e-471b-a686-15460da145e0
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Abouarab, Rabab Samir
50ef9914-0c61-4b62-bade-0cd46400fa09
Mishra, Tapas
218ef618-6b3e-471b-a686-15460da145e0
Wolfe, Simon
9a2367fc-36cc-496a-bbd2-e7346bcbb19e
Abouarab, Rabab Samir, Mishra, Tapas and Wolfe, Simon
(2024)
Spotting portfolio greenwashing in environmental funds.
Journal of Bussiness Ethics.
(In Press)
Abstract
This paper examines greenwashing practices in sustainable funds. We utilize a unique
data set of US equity mutual fund holdings between 2012 and 2021 to calculate the sustainable
funds’ carbon footprint. We then use a Difference-in-Differences analysis to measure
how much the carbon footprint of sustainable funds changes after announcing their commitment to sustainability. The results show that sustainable funds fail to reduce their carbon
footprint relative to a matched group of conventional funds. Using an event study, we also
find that sustainable fund flows significantly increase in response to fund announcements.
This provides evidence of greenwashing in sustainable funds which raises concerns about
their fiduciary duty. Our findings also indicate that greenwashers tend to be underperforming
funds with relatively low flows which then announce their commitment to sustainable
investing to attract investor inflows.
Text
Greenwashing in Sustainable Funds_ Final Version
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Accepted/In Press date: 22 July 2024
Identifiers
Local EPrints ID: 493719
URI: http://eprints.soton.ac.uk/id/eprint/493719
ISSN: 0167-4544
PURE UUID: 44812aa0-211e-41ab-ab8f-6c02dbe4a03b
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Date deposited: 11 Sep 2024 17:13
Last modified: 12 Sep 2024 02:03
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Author:
Rabab Samir Abouarab
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