Herds on green meadows the decarbonization of institutional portfolios

Lukas Benz, Andrea Jacob, Stefan Paulus, Marco Wilkens

2020 | Academic | Decarbonization, Net-Zero, Portfolio Construction

By using broad institutional ownership data, we show that investors exhibit herding behavior in the sense of decarbonization. They are inclined to follow their own or other investors’ buys in green stocks and sales in brown stocks over adjacent quarters. Beyond that, we find that Hedge Funds as well as Investment Advisors lead the herd by executing trades in the sense of decarbonization.