Does Socially Responsible Investing Change Firm Behavior?

Abstract Using micro-level data, we examine the behavior of socially responsible investment (SRI) funds. SRI funds select firms with lower pollution, more board diversity, higher employee satisfaction, and better workplace safety. Yet, both in cross-section using an exogenous shock to capital, find that do not significantly change firm behavior. Moreover, little evidence they try impact shareholder proposals. Our results suggest are greenwashing, but washing; invest a portfolio environmental social conduct follow through on their promise impact.