Institutional Investors and the Fight Against Climate Change

52 Pages Posted: 1 Apr 2024 Last revised: 6 May 2024

See all articles by Thea Kolasa

Thea Kolasa

University of Zurich - Department of Finance; Swiss Finance Institute

Zacharias Sautner

University of Zurich - Department of Finance; Swiss Finance Institute; European Corporate Governance Institute (ECGI)

Date Written: May 3, 2024

Abstract

This article examines the role of institutional investors in the fight against climate change. We explain the institutional context, provide evidence highlighting institutional investors’ bright and dark sides in this fight, and develop multiple ideas for future research. We show that climate change has a significant impact on institutional investors. Simultaneously, we demonstrate that institutional investors can have a significant positive impact on fighting climate change, particularly if they actively engage with portfolio firms to reduce carbon emissions. For risk management reasons, this is in their own interest, and it is also in the interests of society. We highlight possible future research avenues on the link between institutional investors and climate change, emphasizing issues related to environmental, social, and governance (ESG) rating agencies, greenwashing, and the risk of a loss of trust in ESG products. Climate change constitutes one of the grand challenges of our time, and substantially more research on the role of finance is required.

Keywords: institutional investors, climate change, climate risks, ESG ratings, greenwashing

JEL Classification: F34, G12, G32, M14, Q54

Suggested Citation

Kolasa, Thea and Sautner, Zacharias, Institutional Investors and the Fight Against Climate Change (May 3, 2024). Swiss Finance Institute Research Paper No. 24-26, Available at SSRN: https://ssrn.com/abstract=4777844 or http://dx.doi.org/10.2139/ssrn.4777844

Thea Kolasa

University of Zurich - Department of Finance ( email )

Plattenstr 32
Zurich, 8032
Switzerland

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Zacharias Sautner (Contact Author)

University of Zurich - Department of Finance ( email )

Plattenstr 32
Zurich, 8032
Switzerland

Swiss Finance Institute ( email )

European Corporate Governance Institute (ECGI) ( email )

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

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