Norwegian version

Can responsible investment induce sustainable corporate behavior? Evidence from the worlds largest equity investor

Can responsible investing help to achieve the UN Sustainable Development Goals? This question remains unsettled in the academic and policy discourse, and it lies at the crux of our research project.

Responsible investment refers to the strategy and practice of incorporating environmental, social, and governance (ESG) factors in investment decisions and active ownership. As ESG issues rise to the top of the agendas of many investors and asset managers, research on whether and how responsible investment actually impacts real-world corporate behavior has become more relevant. For example, can responsible investing help to achieve the UN Sustainable Development Goals?

  • Participants at OsloMet

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  • More about the project

    INVESTINGIMPACT is an empirical microeconomic study of the effect of responsible investment on investee firms’ ESG performance. We focus on the sustainability and ethically motivated divestitures by Norway’s USD 1.4 trillion Government Pension Fund Global (GPFG or the 'Oil Fund’). 

    Our premise is that the Oil Fund's standing as the world’s largest equity investor and a market leader in responsible investment makes it different from other investors. While divestments are often thought to be ineffective, the Fund's position means that its divestment can significantly and negatively influence companies' stock prices. This fall in stock price, in turn, may affect companies' behavior as they seek to decrease their capital cost.

    While there is a large, related literature on corporate governance (among other fields), this will be the first economics study of the impact of GPFG divestments on firms' real-world behavior. Using a difference-in-differences design, the project will examine: 

    1. the direction of the average causal effect;
    2. the heterogeneity of effect by divestment rationale (i.e., product vs. conduct); and
    3. the adjustments that firms make to their environmental footprint in response to divestment

    Through these analyses, our project aims to expand our knowledge of the role that responsible investment and financial markets can play in promoting sustainable development.