Catering through transparency: Voluntary ESG disclosure by asset managers and fund flows
51 Pages Posted: 18 May 2022
Date Written: May 16, 2022
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: Suggested Citation