Are Green Funds for Real?

Abstract

We investigate green funds’ reactions to firms addressing the climate transition during earnings calls. We document that green funds invest significantly more in firms discussing the climate transition, even when controlling for the environmental score. Moreover, we show that, after addressing the topic for the first time, firms see their green fund ownership increase by twice as much as matched firms with similar characteristics. Crucially, such firms limit carbon emissions one year after discussing the climate transition. Overall, our results highlight an effective communication channel for firms to convey their climate stance to green investors.

Keywords: sustainable finance, mutual funds, earnings calls, climate disclosure, carbon emissions.

JEL Classification: G11, G23, D62, Q54.