Communication à une conférence sans comité de sélection

Socially Responsible Finance: How to Optimize Impact?

Augustin Landier (HEC Paris)


We consider a general equilibrium productive economy with negative externalities. Entrepreneurs maximize profits, and investors seek to maximize their pecuniary and nonpecuniary returns. We analyze how in equilibrium, the size and investment policy of a socially responsible fund (SRF) vary with investors’ preferences, production technologies and capital market frictions. If investors care about impact, the SRF should prioritize investments in companies with acute negative externalities and facing strong capital market friction. The SRF can amplify its impact by imposing restrictions on the suppliers used by the firms it finances. This lowers emissions even in industries that are not directly financed by the SRF. The nonpecuniary benefits of investors improve welfare when they take the form of sensitivity to impact but can deteriorate welfare when take the form of value alignment.


Impact investing, ESG funds, emission externalities, carbon footprint;

Codes JEL

  • G11: Portfolio Choice • Investment Decisions
  • G23: Non-bank Financial Institutions • Financial Instruments • Institutional Investors
  • M14: Corporate Culture • Diversity • Social Responsibility
  • O44: Environment and Growth
  • Q51: Valuation of Environmental Effects


Augustin Landier (HEC Paris), « Socially Responsible Finance: How to Optimize Impact? », 2nd Sustainable Finance Center Conference, TSE, Toulouse, 2021.

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Publié dans

2nd Sustainable Finance Center Conference, TSE, Toulouse, 2021