Publication Type
Working Paper
Version
publishedVersion
Publication Date
8-2021
Abstract
We find that a non-trivial number of hedge funds that endorse the United Nations Principles for Responsible Investment indulge in greenwashing. Hedge funds that greenwash underperform both genuinely green and nongreen funds after adjusting for risk. Consistent with an agency explanation, greenwashers (i) underperform more when incentive alignment is poor, (ii) trigger more regulatory violations, and (iii) report more suspicious returns. By exploiting regulatory reforms that aim to enhance stewardship and curb greenwashing, we provide causal evidence that relates agency problems to greenwashing and fund underperformance. Investors, however, do not appear to discriminate between greenwashers and genuinely green funds.
Keywords
Principles for Responsible Investment, Greenwash, Hedge Funds, Walk the Talk, Agency Problems, Operational Risk, ESG, Stewardship
Discipline
Finance and Financial Management
Research Areas
Finance
First Page
1
Last Page
68
Publisher
Singapore Managment University, Sim Kee Boon Institute for Financial Economics
City or Country
Singapore
Embargo Period
8-29-2021
Citation
LIANG, Hao; SUN, Lin; and TEO, Melvyn.
Greenwashing: Evidence from hedge funds. (2021). 1-68.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6737
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.