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Are Green Funds for Real?

Author

Listed:
  • Coralie Jaunin

    (University of Lausanne; Swiss Finance Institute)

  • Luciano Somoza

    (University of Lausanne; Swiss Finance Institute)

  • Tammaro Terracciano

    (University of Geneva; Swiss Finance Institute)

Abstract

We empirically study green funds’ investments following earning calls where firms discuss the climate transition. To do so, we use an unsupervised machine learning algorithm to extract a measure of climate transition talk during earning conference calls and look at how mutual funds respond to it. We find that after starting to discuss the climate transition, firms see their green fund ownership increase by twice as much as matched firms with similar characteristics but that did not discuss the topic. As expected, we do not find any differences in non-green ownership. Importantly, we also show that firms discussing the climate transition limit their carbon emissions compared to the market portfolio. Contrary to claims of generalized greenwashing, our results indicate the existence of a channel for firms to communicate their climate stance to green investors effectively.

Suggested Citation

  • Coralie Jaunin & Luciano Somoza & Tammaro Terracciano, 2023. "Are Green Funds for Real?," Swiss Finance Institute Research Paper Series 22-19, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2219
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    More about this item

    Keywords

    sustainable finance; mutual funds; earnings calls; climate disclosure; carbon emissions;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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