Abstract:*

Using a wide sample of international investment funds, we document that the recent introduction of the EU Sustainable Finance Disclosure Regulation (SFDR)—the first wide-ranging sustainability disclosure mandate ever imposed on investment funds—was followed by a decarbonization of the investment portfolios of EU funds that claim to invest based on sustainability criteria (i.e., our “treatment” group). The results hold for both direct and indirect emissions and are robust to a variety of control groups. Additional tests suggest that the lower level of emissions is due to changes in funds’ investment decisions as well as to changes in firm-level emissions (presumably induced by investor pressure). The patterns are more pronounced for funds with higher levels of portfolio emissions prior to the SFDR. Our results inform the debate on the role of mandatory disclosure on the current efforts to curb greenwashing in the investment sector.

*Co-authored with J. Dai, G. Ormazabal, F. Penalva

General information:

Attendance to this seminar is possible by invitation only. Please send an e-mail to secbs-abs@uva.nl if your are interested in attending this seminar.