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Moral mentor of the company? Multifaceted influence of sustainable and responsible funds on corporate social responsibility disclosure in China

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Abstract

This study investigates whether sustainable and responsible investment (SRI) funds can serve as “social responsibility mentors” of focal firms in a Chinese context. On this basis, we posit that firms’ greenwashing motives may lead to a bias between information disclosure and actual performance in corporate social responsibility (CSR). Using data from China’s publicly listed companies, we find a U-shaped relationship between SRI fund ownership and CSR disclosure quality; intrinsic and extrinsic greenwashing motives can weaken this curvilinear relationship. Furthermore, we examine the influence mechanism and prove that SRI funds use social screening strategies as an indirect channel to affect CSR disclosure. This mechanism is also verified when we consider SRI funds’ number and investment portfolio. We conclude that SRI funds have a multifaceted influence on the CSR disclosure of focal firms, enriching the understanding of SRI funds and corporate sustainability in the capital markets of emerging economies.

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Notes

  1. GSIA. Global Sustainable Investment Review 2020.

  2. PRI. PRI Annual Report 2022.

  3. For US-listed firms, the mean ownership of SRI funds is 0.21% in the sample of Dimson et al. (2015) from 1999 to 2009, and is 0.112% in the sample of Grewal et al. (2021) from 2007 to 2015.

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Funding

We are thankful to the editors and anonymous reviewers for their constructive suggestions. The authors are grateful for the support provided by the National Natural Science Foundation of China (Grant No. 72174096) and the Fund for Talent Development from the South China University of Technology (Grant No. 20210075). All authors contributed equally to this manuscript.

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  1. China Academy of Corporate Governance, Business School, Nankai University, Baidi Road No.121, Nankai District, Tianjin, China

    Weian Li & Yupei Liu

  2. Business School, Tianjin University of Finance and Economics, Tianjin, China

    Weian Li

  3. School of Business Administration, South China University of Technology, Guangzhou, China

    Lixiang Wang

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Li, W., Liu, Y. & Wang, L. Moral mentor of the company? Multifaceted influence of sustainable and responsible funds on corporate social responsibility disclosure in China. Asia Pac J Manag (2023). https://doi.org/10.1007/s10490-023-09900-w

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