Which investors support the transition toward a low-carbon economy? Exit and Voice in mutual funds

Jonas Zink ()
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Jonas Zink: University of Augsburg

Journal of Asset Management, 2024, vol. 25, issue 2, No 3, 147-161

Abstract: Abstract Reducing portfolio carbon footprints (Exit) and voting in favor of climate-related shareholder proposals (Voice) are among the main actions that investors can take to promote an accelerated transition toward a low-carbon economy. This paper studies three important investor groups that can be instrumental in driving the transition and evaluates their Exit and Voice behavior. I find that the five largest asset managers perform poorly on Exit and Voice over the full sample period but improved on both in more recent years. Only a small fraction of signatories to sustainable investor initiatives are supportive of the transition. Counterintuitively, investors who perform poorly on Exit, perform well on Voice. Finally, I examine the financial consequences of employing Exit and Voice and find that Exit is positively related to risk-adjusted fund returns; however, this is not necessarily attributable to superior skill of fund managers.

Keywords: Exit; Voice; Mutual funds; Climate change; Transition; Fund performance (search for similar items in EconPapers)
JEL-codes: D22 G11 G23 Q51 Q54 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s41260-023-00345-w

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