Responsible Institutional Investing Around the World

We explore a novel survey on responsible investing by institutional investors around the world and match it to archival data on their equity portfolio holdings. We document that institutions that publicly commit to responsible investing exhibit better environmental, social, and governance (ESG) portfolio level scores (“footprints”) but this is not the case for US-domiciled institutions. In fact, US investors that committed but only partially implement ESG strategies (e.g., screening, integration, engagement) exhibit worse ESG footprints than uncommitted investors, consistent with some “greenwashing.” Finally, we document that responsible investing does not enhance portfolio returns but reduces risk.