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The Sustainable Finance Disclosure Regulation: Voluntary Signaling or Mandatory Disclosure?

Author

Listed:
  • Spaans, Lara
  • Derwall, Jeroen
  • huij, joop
  • Koedijk, Kees

Abstract

We study the consequences of mandatory sustainable finance disclosure regulation (SFDR) for the money flows and investment behavior of mutual funds. We find that EU-regulated funds significantly improve the ESG profile of their investments relative to US mutual funds, holding for both the retail and the institutional funds. Taken together, we find that SFDR enables mutual funds to attract capital by signaling comitments to sustainable investments.

Suggested Citation

  • Spaans, Lara & Derwall, Jeroen & huij, joop & Koedijk, Kees, 2024. "The Sustainable Finance Disclosure Regulation: Voluntary Signaling or Mandatory Disclosure?," CEPR Discussion Papers 18881, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18881
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    More about this item

    Keywords

    Mandatory disclosure; Signaling; Investor preferences; Mutual funds; Sustainable finance;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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