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Mutual Funds and Climate News

Author

Listed:
  • Cornelli, Giulio
  • Gambacorta, Leonardo
  • Oliviero, Tommaso
  • Takahashi, Koji

Abstract

In the context of rising public awareness of climate change, the proliferation of green mutual funds reflects expectations of their contribution to a sustainable economic transition. This paper investigates the effect of climate news on mutual funds’ flows, and on their portfolio allocation decisions. Using detailed flow- and holdings- level data, we observe that heightening climate news results in significantly larger capital inflows into green funds versus their non-green counterparts. Furthermore, we show that, in reaction to climate news, green funds decrease their exposure to high-polluting firms relative to low-polluting firms more than non-green funds do. These results suggest that increasing public awareness boosts capital re-allocation towards green funds and this, in turn, potentially fosters investment relocation towards more environmentally- friendly companies.

Suggested Citation

  • Cornelli, Giulio & Gambacorta, Leonardo & Oliviero, Tommaso & Takahashi, Koji, 2025. "Mutual Funds and Climate News," CEPR Discussion Papers 19984, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19984
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    File URL: https://cepr.org/publications/DP19984
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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
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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