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Decarbonizing Institutional Investor Portfolios: Helping to Green the Planet or Just Greening Your Portfolio?

Author

Listed:
  • Vaska Atta-Darkua

    (University of Virginia, Darden School of Business)

  • Simon Glossner

    (Board of Governors of the Federal Reserve System)

  • Philipp Krueger

    (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; European Corporate Governance Institute (ECGI); University of Geneva - Geneva School of Economics and Management)

  • Pedro Matos

    (University of Virginia - Darden School of Business; European Corporate Governance Institute (ECGI))

Abstract

We study how institutional investors that join climate-related investor initiatives decarbonize their equity portfolios. Decarbonization can be achieved either by re-weighting portfolios towards lower carbon emitting firms or alternatively via targeted engagements with portfolio companies to reduce their emissions. Our findings indicate that portfolio re-weighting is the predominant greening strategy by climate-conscious investors, in particular by those based in countries with carbon emissions pricing schemes. We do not uncover much evidence of engagement even after the 2015 Paris Agreement. Furthermore, we find no evidence that climate-conscious investors allocate capital towards firms developing climate patents, but they do re-weight towards firms starting to generate green revenues. Overall, our analysis raises doubts about the effectiveness of investor-led initiatives in reducing corporate emissions and helping an all-economy transition to “green the planet”.

Suggested Citation

  • Vaska Atta-Darkua & Simon Glossner & Philipp Krueger & Pedro Matos, 2025. "Decarbonizing Institutional Investor Portfolios: Helping to Green the Planet or Just Greening Your Portfolio?," Swiss Finance Institute Research Paper Series 25-42, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2542
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    More about this item

    Keywords

    climate change; decarbonization; GHG emissions; sustainability; institutional investors; CDP; Climate Disclosure Project; Climate Action 100+;
    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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