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Do Mutual Funds Greenwash? Evidence from Fund Name Changes

Author

Listed:
  • Alexander Cochardt

    (University of St. Gallen)

  • Stephan Heller

    (University of St. Gallen)

  • Vitaly Orlov

    (University of St. Gallen; Swiss Finance Institute)

Abstract

This paper investigates whether mutual funds that introduce sustainability-related buzzwords in their names actually shift their focus to sustainable investing following the name change. Relatively less successful funds tend to engage in such rebrandings to regain investor flows. Following the name change, funds improve their portfolio sustainability scores by imposing negative screens on poor-sustainability-performing firms. However, we find no evidence that such funds exert any commitment to improve firms’ sustainability practices through voting on environmental, social or governance proposals. The commitment to sustainability is even less present when their votes are more likely to be pivotal, consistent with greenwashing.

Suggested Citation

  • Alexander Cochardt & Stephan Heller & Vitaly Orlov, 2023. "Do Mutual Funds Greenwash? Evidence from Fund Name Changes," Swiss Finance Institute Research Paper Series 23-64, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2364
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    More about this item

    Keywords

    Mutual Funds; ESG; Greenwashing; Voting;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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