Are Green Funds for Real?

Coralie Jaunin, Luciano Somoza and Tammaro Terracciano
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Coralie Jaunin: University of Lausanne; Swiss Finance Institute
Luciano Somoza: University of Lausanne; Swiss Finance Institute
Tammaro Terracciano: University of Geneva; Swiss Finance Institute

No 22-19, Swiss Finance Institute Research Paper Series from 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.

Keywords: sustainable finance; mutual funds; earnings calls; climate disclosure; carbon emissions (search for similar items in EconPapers)
JEL-codes: D62 G11 G23 Q54 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2023-04
New Economics Papers: this item is included in nep-ban, nep-cwa, nep-ene, nep-env and nep-isf
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2219

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