No. 948 - Sustainable finance regulation, funds' portfolio reallocation and real effects

by Francesco Columba, Andrea Fabiani, Raffaele Gallo e Giorgio Meucci
July 2025
Vai alla versione italiana Site Search

This paper analyses the relationship between the investments of mutual funds based on environmental, social, and governance (ESG) criteria, the stock prices of the companies they invest in, and the real outcomes for those companies. More specifically, we examine the impact of the introduction of the European Sustainable Finance Disclosure Regulation (SFDR) in 2021, which required mutual funds to disclose how their investment strategies do (or do not) take ESG criteria into account.

Funds disclosing that they take ESG criteria into account experienced greater net inflows compared with other funds and reduced their investments in companies more exposed to ESG risks. These divestments did not consider the sustainability commitments previously undertaken by those firms and were associated with a significant decline in their stock prices, as well as with lower environmental spending and higher carbon emissions by the same companies.

Full text

  1. 23 July 2025
    No. 948 - Sustainable finance regulation, funds' portfolio reallocation and real effects
    PDF 3 MB

Sezione di approfondimento