Spotting Portfolio Greenwashing in Sustainable Funds

49 Pages Posted: 29 Oct 2022 Last revised: 16 Dec 2022

See all articles by Rabab Abouarab

Rabab Abouarab

Southampton Business School - University of Southampton

Tapas Mishra

Southampton Business School, University of Southampton

Simon Wolfe

University of Southampton - Southampton Business School

Date Written: July 1, 2022

Abstract

This paper examines greenwashing practice in sustainable funds. We utilize a unique data set of US equity mutual fund holdings between 2011 and 2021 to calculate the sustainable funds' carbon footprint. Using an event study, we find that sustainable fund flows initially respond positively to fund announcements of commitments to decarbonization. We then use a Difference-in-Differences analysis to measure how much the carbon footprint of sustainable funds changes following the announcement date. The results confirm that sustainable funds fail to reduce their carbon footprint relative to a matched group of conventional funds. This provides strong evidence of greenwashing in sustainable funds.

Keywords: Greenwashing; Sustainable funds; ESG investing; Funds prospectus; Carbon footprint

JEL Classification: G10; G11; G14

Suggested Citation

Abouarab, Rabab and Mishra, Tapas and Wolfe, Simon, Spotting Portfolio Greenwashing in Sustainable Funds (July 1, 2022). Available at SSRN: https://ssrn.com/abstract=4258128 or http://dx.doi.org/10.2139/ssrn.4258128

Rabab Abouarab (Contact Author)

Southampton Business School - University of Southampton ( email )

Highfield
University Road
Southampton, SO17 1BJ
United Kingdom

Tapas Mishra

Southampton Business School, University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

Simon Wolfe

University of Southampton - Southampton Business School ( email )

Southampton, SO17 1BJ
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
188
Abstract Views
547
Rank
256,260
PlumX Metrics