The role of institutional investors in the green market

Abstract

In recent years, the concern over climate change has found its translation in the financial industry in the green market, where environmental and social scores are integrated to the canonical financial indicators that shape the investment decision-making process. However, investments in the green market by individual investors might not straightforwardly turn into a real economic improvement and greening. As a consequence, reputable governance authorities seek to involve institutional investors in the green investing process and the adoption of ESG practices, as their attributes and activism could facilitate and accelerate the enactment of such practices in firms and corporations. In this thesis, I aim to fulfill three main goals relating to this issue: to introduce the concept of green investing and ESG practices; to present the role of institutional investors in relation to the green market by differentiating them based upon their characteristics and contributions; to investigate their role in the attention and promotion of this environmentally and socially responsible behaviours in the firms in which they hold a substantial ownership share. Finally, I will consider and examine the regulators’ actions to incentivize the support and engagement of such prominent financial actors in the development of the green market.