Are All ESG Funds Created Equal? Only Some Funds Are Committed

64 Pages Posted: 26 May 2022 Last revised: 4 Mar 2024

See all articles by Michelle Lowry

Michelle Lowry

Drexel University; European Corporate Governance Institute (ECGI)

Pingle Wang

University of Texas at Dallas, Naveen Jindal School of Management, Department of Finance

Kelsey D. Wei

University of Texas at Dallas

Date Written: March 15, 2022

Abstract

There is significant heterogeneity in incentives of fund managers to engage with portfolio firms. We argue that differences in ESG funds’ incentives affect their information acquisition, investment strategies, engagement activities, and real impacts. Our findings support these predictions. Conditional on similarly large ESG investments, those funds with higher incentives to engage, i.e., committed ESG funds, differ significantly from other ESG funds along these dimensions. Moreover, committed ESG funds have outperformed other ESG funds within longer held positions and within ESG stocks. Our findings highlight that committed ESG funds view ESG as a value driver.

Keywords: mutual funds, ESG

JEL Classification: G11, G30

Suggested Citation

Lowry, Michelle B. and Wang, Pingle and Wei, Kelsey D., Are All ESG Funds Created Equal? Only Some Funds Are Committed (March 15, 2022). European Corporate Governance Institute – Finance Working Paper No. 874/2023, Available at SSRN: https://ssrn.com/abstract=4104700 or http://dx.doi.org/10.2139/ssrn.4104700

Michelle B. Lowry

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

European Corporate Governance Institute (ECGI) ( email )

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

Pingle Wang (Contact Author)

University of Texas at Dallas, Naveen Jindal School of Management, Department of Finance ( email )

800 West Campbell
Richarson, TX 75080
United States

HOME PAGE: http://www.wangpingle.com

Kelsey D. Wei

University of Texas at Dallas ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States
9728835978 (Phone)

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