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Mutual funds and climate news

Author

Listed:
  • Giulio Cornelli
  • Leonardo Gambacorta
  • Tommaso Oliviero
  • Koji Takahashi

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.

Suggested Citation

  • Giulio Cornelli & Leonardo Gambacorta & Tommaso Oliviero & Koji Takahashi, 2025. "Mutual funds and climate news," BIS Working Papers 1243, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1243
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    More about this item

    Keywords

    mutual funds; climate news; green finance;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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