Institutional Investors and the Fight Against Climate Change

Thea Kolasa and Zacharias Sautner
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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)

No 24-26, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

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.

Keywords: institutional investors; climate change; climate risks; ESG ratings; greenwashing (search for similar items in EconPapers)
JEL-codes: F34 G12 G32 M14 Q54 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2024-04
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2426

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