Release from Restricted Environmental and Social Investing: Evidence from agreements between asset owners and asset managers

We investigate the impact of the awareness gap between asset owners and asset managers on environmental and social (ES) investments, using the signing of the United Nations Principles for Responsible Investing (PRI) by the Japanese Government Pension Investment Fund (GPIF) as an exogenous shock. The results show that the ES scores of firms that received investments from GPIF-entrusted asset managers who had also already signed the PRI improved after the GPIF signed the PRI, but the ES scores of asset managers who had signed the PRI but had not been commissioned by the GPIF did not improve. These results suggest that the agreement on ES investment between asset owners and asset managers plays a more important role in facilitating firms’ ES activities.