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Dirty air and green investments: The impact of pollution information on portfolio allocations

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  • Fisman, Raymond
  • Ghosh, Pulak
  • Sarkar, Arkodipta
  • Zhang, Jian

Abstract

We study whether access to local pollution information causes investors to make greener portfolio allocations, exploiting the rollout of air quality monitoring stations in India. Using a triple-differences framework on the trading records of 19 million investors, we show that retail investors’ holdings in “brown” stocks become more negatively related to local pollution after a nearby station appears. This effect is more pronounced on “alert” dates when air quality is reported to be harmful. The effect is strongest among tech-savvy investors likely “treated” by real-time pollution data, and younger investors, who may be more sensitive to environmental concerns.

Suggested Citation

  • Fisman, Raymond & Ghosh, Pulak & Sarkar, Arkodipta & Zhang, Jian, 2026. "Dirty air and green investments: The impact of pollution information on portfolio allocations," Journal of Financial Economics, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:jfinec:v:182:y:2026:i:c:s0304405x26000802
    DOI: 10.1016/j.jfineco.2026.104309
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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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