Herds on Green Meadows – The Decarbonization of Institutional Portfolios

28 Pages Posted: 14 Oct 2019

See all articles by Lukas Benz

Lukas Benz

University of Augsburg

Andrea Jacob

University of Augsburg

Stefan Paulus

University of Augsburg - Department of Finance and Banking

Marco Wilkens

University of Augsburg

Date Written: September 30, 2019

Abstract

We analyze an emerging sustainable trend in asset management: the decarbonization of institutional portfolios. By using broad institutional ownership data we show that investors exhibit herding behavior in the sense of decarbonization. They are inclined to follow their own or other investors’ buys in green stocks and sales in brown stocks over adjacent quarters. In addition, we find that Hedge Funds as well as Investment Advisors lead the herd by executing trades in the sense of decarbonization. This is in line with expectations, since Investment Advisors are often bound to social norms, which nowadays include awareness for environmental aspects. For the aspired achievement of market-wide decarbonization, investors leading the herd should be encouraged to further decarbonize their portfolios in order to trigger follow-up trades.

Keywords: decarbonization, institutional investors, herding

JEL Classification: G11, G15, G23, M14

Suggested Citation

Benz, Lukas and Jacob, Andrea and Paulus, Stefan and Wilkens, Marco, Herds on Green Meadows – The Decarbonization of Institutional Portfolios (September 30, 2019). Available at SSRN: https://ssrn.com/abstract=3461683 or http://dx.doi.org/10.2139/ssrn.3461683

Lukas Benz (Contact Author)

University of Augsburg ( email )

Universitätsstr. 2
Augsburg, 86159
Germany

Andrea Jacob

University of Augsburg ( email )

Universitätsstr. 2
Augsburg, 86159
Germany

Stefan Paulus

University of Augsburg - Department of Finance and Banking ( email )

Universitaetsstr. 2
Augsburg, 86135
Germany

Marco Wilkens

University of Augsburg ( email )

Universitaetsstr. 16
Augsburg, 86159
Germany
+49 821 598 4124 (Phone)
+49 821 598 4223 (Fax)

HOME PAGE: http://www.wiwi.uni-augsburg.de/bwl/wilkens/team/wilkens_marco/

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