Responsible investors and green innovation

Abstract

This paper investigates the relationship between responsible investors and corporate green innovation using a sample of U.S.-listed firms. We present novel evidence of a positive association between responsible institutional ownership and firm-level green innovation, a finding that remains robust after addressing potential endogeneity concerns. Importantly, we demonstrate that identifying responsible investors based on their actual portfolio ESG footprints yields substantially different inferences from relying on self-identification through UNPRI signatories. This distinction reveals heterogeneous mechanisms through which responsible investors influence corporate environmental outcomes and offers new insights into the theoretical frameworks linking ESG preferences to real economic activity.