The Sustainable Finance Disclosure Regulation: Voluntary Signaling or Mandatory Disclosure?

Lara Spaans*, Jeroen Derwall, Joop Huij, Kees Koedijk

*Corresponding author for this work

Research output: Working paper / PreprintDiscussion paper

Abstract

We study the consequences of mandatory sustainable finance disclosure regulation (SFDR) for the money flows and investment behavior of mutual funds. We find that EU-regulated funds significantly improve the ESG profile of their investments relative to US mutual funds, holding for both the retail and the institutional funds. Taken together, we find that SFDR enables mutual funds to attract capital by signaling commitments to sustainable investments.
Original languageEnglish
PublisherCenter for Economic Policy Research (CEPR)
Number of pages45
Publication statusPublished - 4 Mar 2024

Publication series

SeriesCEPR Discussion Papers
Number18881

JEL classifications

  • g11 - "Portfolio Choice; Investment Decisions"
  • g15 - International Financial Markets
  • g23 - "Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors"
  • q58 - Environmental Economics: Government Policy

Keywords

  • mandatory disclosure
  • signaling
  • Investor preferences
  • mutual funds
  • sustainable finance

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