Do Responsible Investors Invest Responsibly?

Do Responsible Investors Invest Responsibly?

Rajna Gibson Brandon, Simon Glossner, Philipp Krueger, Pedro Matos, Tom Steffen

Series number :

Serial Number: 
712/2020

Date posted :

November 25 2020

Last revised :

February 07 2022
SSRN Share

Keywords

  • ESG • 
  • SRI • 
  • PRI • 
  • socially responsible investing • 
  • Sustainability • 
  • institutional investors • 
  • greenwashing

We study whether institutional investors that sign the Principles for Responsible Investment (PRI), a commitment to responsible investing, exhibit better portfolio-level environmental, social, and governance (ESG) scores.

Signatories outside the US have superior ESG scores than non-signatories, but US signatories have at best similar ESG ratings, and worse scores if they have underperformed recently, are retail-client facing, and joined the PRI late. US signatories do not improve the ESG scores of portfolio companies after investing in them. Commercial motives, uncertainty about fiduciary duties, and lower ESG market maturity explain why US-domiciled PRI signatories do not follow through on their responsible investment commitments.

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Authors

Real name:
Simon Glossner
Professor
Real name:
Pedro Matos
Research Member
Darden School of Business, University of Virginia
Real name:
Tom Steffen