Catering through transparency: Voluntary ESG disclosure by asset managers and fund flows

51 Pages Posted: 18 May 2022

See all articles by Marco Ceccarelli

Marco Ceccarelli

Maastricht University - Department of Finance

Simon Glossner

Board of Governors of the Federal Reserve System

Mikael Homanen

City University London - The Business School; PRI Association

Date Written: May 16, 2022

Abstract

We find that voluntary ESG disclosure by asset managers enables clients to identify investors with higher ESG integration, thereby reducing the information asymmetry within the responsible investment landscape. Institutional investors disclose on their ESG practices as part of their voluntary commitment to the Principles for Responsible Investing (PRI), the world’s largest responsible investment network. After joining the PRI, investors annually file a detailed ESG report, which is assessed and scored by the PRI. Clients allocate more assets toward institutions that receive higher scores on their disclosure. The disclosure signal becomes more effective when it is corroborated by third-party ESG fund ratings and when it correlates with more sustainable equity holdings.

Keywords: ESG disclosure; mutual funds; sustainability; Prinicples for Responsible Investing.

JEL Classification: G23, G4, M41

Suggested Citation

Ceccarelli, Marco and Glossner, Simon and Homanen, Mikael, Catering through transparency: Voluntary ESG disclosure by asset managers and fund flows (May 16, 2022). Available at SSRN: https://ssrn.com/abstract=4110596 or http://dx.doi.org/10.2139/ssrn.4110596

Marco Ceccarelli (Contact Author)

Maastricht University - Department of Finance ( email )

Tongersestraat 53
Maastricht, 6211 LM
Netherlands

HOME PAGE: http://https://sites.google.com/view/marcoceccarelli

Simon Glossner

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Mikael Homanen

City University London - The Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

PRI Association ( email )

25 Camperdown Street
London, E18DZ

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