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The road to net zero: a fund flow investigation

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  • Louisa Chen
  • Koji Takahashi

Abstract

We analyze how U.S. green and brown energy equity mutual funds and ETFs respond to public attention on climate change from 2006 to 2022. Our findings indicate that green fund inflows consistently increased, peaking in 2020 in reaction to climate news, while brown fund inflows steadily declined. This shift toward green investments may discourage brown investments and help mitigate the negative impacts of climate news on stock market and industry production growth. The pace of transition from brown to green funds aligns with changes in U.S. climate policy, with a faster transition associated with positive stock market performance and industry production growth.

Suggested Citation

  • Louisa Chen & Koji Takahashi, 2024. "The road to net zero: a fund flow investigation," BIS Working Papers 1220, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1220
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    References listed on IDEAS

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    Keywords

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    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
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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