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Institutional Investors and the Fight Against Climate Change

Author

Listed:
  • Thea Kolasa

    (University of Zurich - Department Finance; Swiss Finance Institute)

  • Zacharias Sautner

    (University of Zurich - Department of Finance; Swiss Finance Institute; European Corporate Governance Institute (ECGI))

Abstract

This article examines the role of institutional investors in the fight against climate change. We explain the institutional context, provide evidence highlighting institutional investors’ bright and dark sides in this fight, and develop multiple ideas for future research. We show that climate change has a significant impact on institutional investors. Simultaneously, we demonstrate that institutional investors can have a significant positive impact on fighting climate change, particularly if they actively engage with portfolio firms to reduce carbon emissions. For risk management reasons, this is in their own interest, and it is also in the interests of society. We highlight possible future research avenues on the link between institutional investors and climate change, emphasizing issues related to environmental, social, and governance (ESG) rating agencies, greenwashing, and the risk of a loss of trust in ESG products. Climate change constitutes one of the grand challenges of our time, and substantially more research on the role of finance is required.

Suggested Citation

  • Thea Kolasa & Zacharias Sautner, 2024. "Institutional Investors and the Fight Against Climate Change," Swiss Finance Institute Research Paper Series 24-26, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2426
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    More about this item

    Keywords

    institutional investors; climate change; climate risks; ESG ratings; greenwashing;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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