Does regulatory oversight discipline ESG funds to walk the talk？

Organised by: RCE 1 (Sustainability and ESG)

Time and Date: 14:00 - 15:00 PM, Friday, 5 September 2025 (Beijing time)

Language: English

Onsite location: BS4114

Abstract:

The possibility that investment funds use the ESG - investing label to attract investment flows without making real ESG-oriented investments is a widespread concern. Exploiting the launch other SEC's Climate and ESG Task Force (the Task Force hereafter)we investigate whether securities regulators' over sightdisciplines the funds to “walk the talk." We show that ESG-labelled funds improve their fund-level ESG performance afterthe launch of the Task Force. Such changes are morepronounced among ESG funds located closer to the SEc andthose whose prospectuses have a greater emphasis on ESGissues. Further analyses reveal that ESG funds claiming negative/positive screening strategies are more likely to exclude/includestocks as suggested by their prospectuses; those claiming ESGintegration strategies reduce portfolio weights of firms withnegative ESG incidents; and those claiming active ownershipstrategies are more likely to participate in voting ofenvironmental and social proposals and their votes are moresupportive of proposals advocating greater transparency in ESG issues. We also explore how the improved ESG-orientedinvestments affect fund returns and fund flows. Collectively, ourresults suggest the effectiveness of regulatory oversight indisciplining ESG funds to “walk the ESG talk”

Presenter:

Dr Lisa Chengzhu SUN, The Hong Kong Polytechnic University

Dr Lisa Chengzhu SUN is an Associate Professor at School of Accounting and Finance, The Hong Kong Polytechnic University. She joined PolyU in 2021 upon the completion of her Ph.D. in Accounting at the LSK Business School, The Hong Kong University of Science and Technology (HKUST).

Dr Sun research interests lie primarily in ESG, regulations, information economics and social networks. She explores the real effects of various governance mechanisms or regulations on firms鈥?non-financial outcomes (especially for the environmental practices such as corporate pollution and carbon emissions).