Sustainable Investing

Lubos Pastor, Robert F. Stambaugh () and Lucian A. Taylor ()
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Robert F. Stambaugh: The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania, USA
Lucian A. Taylor: The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania, USA

Annual Review of Financial Economics, 2025, vol. 17, issue 1, 321-341

Abstract: We review the literature on sustainable investing, focusing on financial effects. First, we examine the effects of investor tastes on portfolio tilts and asset prices in a simple equilibrium setting. We establish novel connections, including a direct relation between the green portfolio tilt and the greenium. We also relate our framework to prior modeling of divestment. Finally, we review evidence related to the main concepts from our theoretical analysis, including the greenium, green tilts, climate risk, and investor tastes.

Keywords: sustainable investing; ESG; greenium; climate risk; environmental, social, and governance (search for similar items in EconPapers)
JEL-codes: G11 G12 G23 (search for similar items in EconPapers)
Date: 2025
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Citations: View citations in EconPapers (1)

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https://doi.org/10.1146/annurev-financial-113023-111705
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Working Paper: Sustainable Investing (2024)
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DOI: 10.1146/annurev-financial-113023-111705

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