As part of the series of the „Finance Research Seminar“, VGSF welcomes Elise Gourier from ESSEC Business School Paris to present her research paper.
A Greenwashing Index
We construct a news-implied index of attention to greenwashing. Our index reveals that greenwashing has become particularly prominent in the past five years. This increase was driven by skepticism towards the financial sector, specifically ESG funds, ESG ratings and green bonds. We show that greenwashing impacts investors’ behaviour and estimated required premium for climate risk. High values of the greenwashing index are followed by decreases in flows into ESG funds. They further bias the estimation of stocks’ beta on climate risk, distorting the estimated climate risk premium. When accounting for greenwashing, the climate risk premium becomes small and statistically insignificant.
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