Sustainable Success: A study on the impact of sustainable signals on European equity fund performance

Abstract

This paper studies the relationship between sustainable signals and the performance of equity funds in Europe. The research question addressed in this paper is which sustainable signals have the most impact on equity fund performance in Europe. The MSCI ESG score and MSCI Impact score are examined as sustainable scores, and the German FNG label and French ISR label are analysed as sustainable labels. A quantitative research is conducted using regression analyses. The results show that the MSCI ESG score has the most impact on the performance of equity funds in Europe when a fund is not labelled with a sustainable label. The findings suggest that sustainable labels are not reliable informational cues for investors to persuade them to shift from unsustainable to sustainable investments.