We explore the relationship between US mutual fund managers' incentives to deliver high returns and their portfolio Environmental, Social, and Governance (ESG) performance. Mutual funds with managerial ownership (``skin in the game'') exhibit lower ESG performance than otherwise similar funds. This effect is stronger for managers paid to maximize assets under management.
Co-investing managers are less likely to buy high-ESG stocks after exogenous shocks in the flow incentives to hold such assets. Overall, the results suggest that fund managers, on average, do not consider ESG selection an enhanced form of portfolio management to maximize risk-adjusted returns.
This paper introduces a new measure of a firm's negative impact on biodiversity, the corporate biodiversity footprint, and studies whether it is priced...
There is an ongoing debate about how proxy advisory firms affect corporate decisions. A major concern is that shareholders seeking to save costs use a...
Climate change poses new challenges for portfolio management. Investors face a trade-off between minimizing climate risk exposure and maximizing the...