Sustainable Investing Under Delegated Investment Management

Meg Adachi-Sato and Hiroshi Osano
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Meg Adachi-Sato: Research Institute for Economics & Business Administration, Kobe University, JAPAN

No DP2023-01, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This paper considers how profit-motivated fund managers of sustainable and passive funds, govern the firms in the portfolios they construct using the capital collected from socially responsible investors. The fund managers endogenously choose their level of engagement with these firms to increase their profit while reducing any negative externalities. Using the search model framework between fund managers and investors, we derive several theoretical and empirical implications with regard to the effects of passive fund growth, sustainable fund growth, and improvement in environmental, social, and governance (ESG) engagement cost upon ESG and monetary performances generated by portfolio firms.

Keywords: Delegated asset investment; ESG; Passive fund; Social impact; Socially responsible investing; Sustainable fund (search for similar items in EconPapers)
JEL-codes: D83 G23 G32 M14 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2023-01, Revised 2024-11
New Economics Papers: this item is included in nep-cfn, nep-env and nep-sea
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https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2023-01.pdf Revised version, 2023 (application/pdf)

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