Climate Change Concerns Meet Return-Chasing: Evidence from Energy ETFs

Financial Review

42 Pages Posted: 24 Sep 2021

See all articles by Viktoriya Lantushenko

Viktoriya Lantushenko

Saint Joseph's University

Carolin Schellhorn

Saint Joseph's University

Gulnara R. Zaynutdinova, Ph.D.

West Virginia University, Department of Finance

Date Written: July 8, 2020

Abstract

Decarbonizing the global economy is a challenge requiring massive funding and coordination across all economic sectors. Energy ETFs play an important role in this transition. We find that investment flows into alternative energy ETFs (A-ETFs) increase with climate change risk. After the Paris Agreement, A-ETFs experience significantly stronger net flows than traditional energy ETFs (T-ETFs): A one-standard-deviation increase in fund return results in about 8-12% higher net flows per year to A-ETFs compared with T-ETFs. Return-sensitive investors appear to have joined the early climate-concerned investors after the global investment community made public its determination to take climate action post 2015.

Keywords: Climate change, energy, ETFs, performance-flow sensitivity

JEL Classification: G11, G23

Suggested Citation

Lantushenko, Viktoriya and Schellhorn, Carolin and Zaynutdinova, Gulnara R., Climate Change Concerns Meet Return-Chasing: Evidence from Energy ETFs (July 8, 2020). Financial Review, Available at SSRN: https://ssrn.com/abstract=3928275

Viktoriya Lantushenko

Saint Joseph's University ( email )

5600 City Avenue,
Philadelphia, PA 19131
United States

Carolin Schellhorn

Saint Joseph's University ( email )

Philadelphia, PA 19131
United States
610-660-1657 (Phone)
610-660-1986 (Fax)

Gulnara R. Zaynutdinova (Contact Author)

West Virginia University, Department of Finance ( email )

John Chambers College of Business and Economics
Morgantown, WV 26506
United States

HOME PAGE: http://https://business.wvu.edu/

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