Do Responsible Investors Invest Responsibly?*

Why and how investors use ESG information: evidence from a global survey

Rajna Gibson Brandon, Simon Glossner, Philipp Krueger, Pedro Matos and Tom Steffen

Review of Finance, 2022, vol. 26, issue 6, 1389-1432

Abstract: We study whether institutional investors that sign the Principles for Responsible Investment (PRI), a commitment to responsible investing, exhibit better portfolio-level environmental, social, and governance (ESG) scores. Signatories outside of the USA have superior ESG scores than nonsignatories, but US signatories have at best similar ESG ratings, and worse scores if they have underperformed recently, are retail-client facing, and joined the PRI late. US signatories do not improve the ESG scores of portfolio companies after investing in them. Commercial motives, uncertainty about fiduciary duties, and lower ESG market maturity explain why US-domiciled PRI signatories do not follow through on their responsible investment commitments.

Keywords: ESG; SRI; PRI; socially responsible investing; sustainability; institutional investors; greenwashing (search for similar items in EconPapers)
JEL-codes: G15 G23 G30 M14 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (29)

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