Climate Impact Investing

77 Pages Posted: 13 Apr 2020 Last revised: 1 Jul 2021

See all articles by Tiziano De Angelis

Tiziano De Angelis

University of Manchester

Peter Tankov

ENSAE, Institut Polytechnique de Paris

Olivier David Zerbib

Boston University

Date Written: June 25, 2021


This paper shows how green investing spurs companies to mitigate their carbon emissions by raising the cost of capital of the most carbon-intensive companies. Companies' emissions decrease when the proportion of green investors and their sensitivity to climate externalities increase. We show that the impact of green investors primarily governs companies' long-term emissions. Companies are further incentivized to reduce their emissions when green investors anticipate tighter climate regulations and climate-related technological innovations. However, heightened uncertainty regarding future climate risks alleviates green investors' pressure on the cost of capital of companies and pushes them to increase their emissions. We provide empirical evidence supporting our results by focusing on United States stocks between 2004 and 2018 and using green fund holdings as a proxy for green investors' beliefs. When the fraction of assets managed by green investors doubles, companies’ carbon intensity drops by 4.9% over one year; when climate uncertainty doubles, companies’ carbon intensity increases by 6.7% the following year.

Keywords: Environmental finance, socially responsible investing, ESG, impact investing

JEL Classification: G12, G11

Suggested Citation

De Angelis, Tiziano and Tankov, Peter and Zerbib, Olivier David, Climate Impact Investing (June 25, 2021). Available at SSRN: or

Tiziano De Angelis

University of Manchester ( email )

Oxford Rd. M13 9PL
United Kingdom

Peter Tankov (Contact Author)

ENSAE, Institut Polytechnique de Paris ( email )


Olivier David Zerbib

Boston University ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

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