Do climate risks matter for green investment?

Ben R. Marshall, Hung T. Nguyen, Nhut H. Nguyen, Nuttawat Visaltanachoti () and Martin Young

Journal of International Financial Markets, Institutions and Money, 2021, vol. 75, issue C

Abstract: We consider the degree to which climate disasters influence investor behavior. Using data on events such as hurricanes and floods, we show that disasters prompt investors to pay more attention to socially responsible investing and invest more in mutual funds with an environmental focus. Consistent with a salience explanation, this effect is more pronounced for disasters that attract the most attention. The funds receiving the increased inflows do not have higher risk-adjusted returns before climate disasters, so there is no evidence to support a return-chasing explanation. Moreover, investors do not gain excess returns from their climate disaster-induced investment decisions.

Keywords: Climate Disasters; Socially Responsible Investing; Mutual Funds (search for similar items in EconPapers)
JEL-codes: G14 G41 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:75:y:2021:i:c:s1042443121001505

DOI: 10.1016/j.intfin.2021.101438

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