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When in Rome, Do as the Romans Do: Disclosure Regulation and ESG Fund Management by Social and Conventional Banks

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  • Richard Bofinger
  • Simon Cornée
  • Ariane Szafarz

Abstract

In 2019, the Sustainable Finance Disclosure Regulation (SFDR) introduced new transparency rules for the investment fund industry to combat greenwashing. This paper compares the sustainability performance of ESG funds marketed by social and conventional banks, before and after the SFDR came into force. Its contribution is twofold. First, the results suggest that the sustainability performance of ESG funds marketed by social banks was not affected by the SFDR. The intuition is that social banks are protected from greenwashing because sustainability and transparency are embedded in their founding principles. Second, and in contrast, the results suggest that the SFDR has successfully reduced greenwashing in the ESG funds of conventional banks.

Suggested Citation

  • Richard Bofinger & Simon Cornée & Ariane Szafarz, 2024. "When in Rome, Do as the Romans Do: Disclosure Regulation and ESG Fund Management by Social and Conventional Banks," Working Papers CEB 24-003, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:2013/368076
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    More about this item

    Keywords

    ESG; Investment funds; Social banks; Sustainable Finance Disclosure Regulation (SFDR); Greenwashing; Transparency;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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