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Do Responsible Investors Invest Responsibly?
[Why and how investors use ESG information: evidence from a global survey]

Author

Listed:
  • Rajna Gibson Brandon
  • Simon Glossner
  • Philipp Krueger
  • Pedro Matos
  • Tom Steffen

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.

Suggested Citation

  • Rajna Gibson Brandon & Simon Glossner & Philipp Krueger & Pedro Matos & Tom Steffen, 2022. "Do Responsible Investors Invest Responsibly? [Why and how investors use ESG information: evidence from a global survey]," Review of Finance, European Finance Association, vol. 26(6), pages 1389-1432.
    • Handle: RePEc:oup:revfin:v:26:y:2022:i:6:p:1389-1432.
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    File URL: http://hdl.handle.net/10.1093/rof/rfac064
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    References listed on IDEAS

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    More about this item

    Keywords

    ESG; SRI; PRI; socially responsible investing; sustainability; institutional investors; greenwashing;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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