Noh and Oh (2020)

Noh, Don, and Sangmin Oh. “Are Green Investors Green-Inducing? A Demand System Approach.” Working paper (Princeton University), June 30, 2020.

From the authors’ abstract: “Despite the growing interest in green investing among academics and industry professionals alike, there is little consensus on whether it successfully incentivizes firms to adopt eco-friendly business practices. Using the equity holdings of institutional investors and the “demand system approach” to asset pricing, we provide evidence that institutional demand for greener stocks encourages firms to improve their environmental performances. Specifically, we devise and estimate a firm-level quantity, institutional pressure for greenness, that measures the price pressure a firm receives from its institutional owners. We find that this quantity has a positive and significant relationship with future improvement in a firm's environmental performance.”

Link:  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3639693