Imbalanced ESG Investing?

48 Pages Posted: 2 Nov 2024

See all articles by Maria-Eleni K. Agoraki

Maria-Eleni K. Agoraki

University of Peloponnese

Georgios P. Kouretas

Athens University of Economics and Business; IPAG Business School

Haoran Wu

University College Dublin (UCD)

Binru Zhao

Bangor Business School

Abstract

This study investigates the imbalance of ESG investing across its environmental (E), social (S), and governance (G) pillars. We find E plays a more significant role in influencing the imbalance level, and mutual funds prioritize mitigating E risks over S and G risks, which is more pronounced in funds with higher sustainability ratings. Moreover, our findings indicate that investors respond to ESG imbalance, with the level of imbalance showing a negative impact on fund flows, especially for funds with higher sustainability ratings. However, this negative relationship is mitigated as climate change concerns increase. Furthermore, we find political ideology plays a role in the ESG imbalance, with the imbalance of funds in blue states being more driven by lower environmental considerations compared to those in red states. Additionally, we observe that the ESG imbalance is positively associated with various fund risks. Our study offers implications for policymakers and stakeholders in the asset management industry regarding ESG investing practices.

Keywords: Imbalance, ESG investing, Fund flows, Climate change concerns, Political ideology, Fund risks

Suggested Citation

Agoraki, Maria-Eleni K. and Kouretas, Georgios P. and Wu, Haoran and Zhao, Binru, Imbalanced ESG Investing?. Available at SSRN: https://ssrn.com/abstract=5008126 or http://dx.doi.org/10.2139/ssrn.5008126

Maria-Eleni K. Agoraki

University of Peloponnese ( email )

Tripolis, 22100
Greece

Georgios P. Kouretas (Contact Author)

Athens University of Economics and Business ( email )

Department of Business Administration
Athens, GR-10434
Greece

HOME PAGE: http://www.aueb.gr/Users/kouretas/index_en.html

IPAG Business School ( email )

184 BD Saint Germain
Paris, 75006
France

Haoran Wu

University College Dublin (UCD) ( email )

Dublin
Ireland

Binru Zhao

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

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