Do ESG Mutual Funds Deliver on Their Promises?

67 Pages Posted: 5 May 2021 Last revised: 22 Jun 2021

See all articles by Quinn Curtis

Quinn Curtis

University of Virginia School of Law

Jill E. Fisch

University of Pennsylvania Carey Law School; European Corporate Governance Institute (ECGI)

Adriana Robertson

University of Chicago Law School

Date Written: June 8, 2021


Corporations have received growing criticism for their role in climate change, perpetuating racial and gender inequality, and other pressing social issues. In response to these concerns, shareholders are increasingly focusing on environmental, social, and corporate governance (ESG) criteria in selecting investments, and asset managers are responding by offering a growing number of ESG mutual funds. The flow of assets into ESG is one of the most dramatic trends in asset management.

But are these funds giving investors what they promise? This question has attracted the attention of regulators, with the Department of Labor and the Securities and Exchange Commission (SEC) both taking steps to rein in ESG funds. The change in administration has created an opportunity to rethink these steps, but the rapid growth and evolution of the market means regulators are acting without a clear picture of ESG investing.

We fill this gap by offering the most complete empirical overview of ESG mutual funds to date. Combining comprehensive data on mutual funds with proprietary data from the several of the most significant ESG ratings firms, we provide a unique picture of the current ESG environment with an eye to informing regulatory policy. We evaluate a number of criticisms of ESG funds made by academics and policymakers and find them lacking. We find that ESG funds offer their investors increased ESG exposure. They also vote their shares differently from non-ESG funds and are more supportive of ESG principles.

Our analysis shows that they do so without increasing costs or reducing returns. We conclude that ESG funds generally offer investors a differentiated and competitive investment product that is consistent with their labeling. In short, we see no reason to single out ESG funds for special regulation.

Keywords: Mutual funds, ESG mutual funds, Securities regulation, empirical legal studies, environmental, social, and corporate governance, ESG, capital markets, portfolio composition, mutual fund voting, mutual fund fees, disclosure, ERISA, fiduciary duty, Name Rule, 35d-1

JEL Classification: G23, G28, K22

Suggested Citation

Curtis, Quinn and Fisch, Jill E. and Robertson, Adriana, Do ESG Mutual Funds Deliver on Their Promises? (June 8, 2021). Michigan Law Review, Forthcoming, U of Penn, Inst for Law & Econ Research Paper No. 21-17, European Corporate Governance Institute - Law Working Paper No. 586/2021, Available at SSRN:

Quinn Curtis

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

HOME PAGE: http://

Jill E. Fisch (Contact Author)

University of Pennsylvania Carey Law School ( email )

Philadelphia, PA 19104
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Adriana Robertson

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States

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