Does Socially Responsible Investing Change Firm Behavior?

Does Socially Responsible Investing Change Firm Behavior?

Davidson Heath, Daniele Macciocchi, Roni Michaely, Matthew C. Ringgenberg

Series number :

Serial Number: 

Date posted :

May 18 2021

Last revised :

February 13 2023
SSRN Share


  • corporate social responsibility (CSR) • 
  • Environmental • 
  • Social • 
  • and Governance (ESG) • 
  • institutional investors • 
  • socially responsible investing (SRI)

Using micro-level data, we examine the behavior of socially responsible investment (SRI) funds. SRI funds select firms with lower pollution, more board diversity, higher employee satisfaction, and better workplace safety. Yet both in the cross-section and using an exogenous shock to SRI capital, we find SRI funds do not significantly change firm behavior.

Moreover, we find little evidence they try to impact firm behavior using shareholder proposals. Our results suggest SRI funds are not greenwashing, but they are impact washing; they invest in a portfolio of firms with better environmental and social conduct, but do not follow through on their promise of impact.

Published in

Published in: 
Review of Finance - Forthcoming


Real name:
Matthew C. Ringgenberg
Real name:
Davidson Heath
Real name:
Daniele Macciocchi