Mutual funds and climate news

Giulio Cornelli, Leonardo Gambacorta, Tommaso Oliviero () and Koji Takahashi

No 1243, BIS Working Papers from Bank for International Settlements

Abstract: In the context of rising public awareness of climate change, the proliferation of green mutual funds reflects expectations of their contribution to a sustainable economic transition. This paper investigates the effect of climate news on mutual funds flows, and on their portfolio allocation decisions. Using detailed flow- and holdings- level data, we observe that heightening climate news results in significantly larger capital inflows into green funds versus their non-green counterparts. Furthermore, we show that, in reaction to climate news, green funds decrease their exposure to high-polluting firms relative to low-polluting firms more than non-green funds do. These results suggest that increasing public awareness boosts capital re-allocation towards green funds and this, in turn, potentially fosters investment relocation towards more environmentally-friendly companies.

Keywords: mutual funds; climate news; green finance (search for similar items in EconPapers)
JEL-codes: G11 G23 Q54 (search for similar items in EconPapers)
Date: 2025-02
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1243

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