The present and future of sustainability disclosure in equity investment funds’ pre-contractual documents: Mapping ESG discourse through STM

https://doi.org/10.1016/j.frl.2023.104033Get rights and content
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Highlights

  • We discuss sustainability communication in precontractual documents for investors.

  • We use an STM to address how sustainability is discussed in funds of different SDFR classes.

  • We propose a ESG score to measure the share of sustainability-related contents in each topic.

  • Article-8 and Article-9 funds features different sustainability discourses coherent with SFDR.

  • Sustainability themes are widely spread across different sections of the KIIDs.

Abstract

To show how pre-contractual documents are currently employed to disclose sustainability and ESG-related information, we map and examine the contents of 945 Key Investor Information Documents (KIIDs) from ten major asset managers, including sustainable and non-sustainable funds. Through a Structural Topic Modelling approach, we infer sustainability-related topics and compare their contents and prevalence in different sections of these documents. Sustainability is a cross-cutting and multifaceted issue, discussed coherently with the SFDR fund classification across multiple sections of the KIID, making the option to convey sustainable information in a single section complex to implement.

Keywords

KIID
KID
ESG
Sustainability
SFDR, Structural topic modelling

JEL codes

G2
G4
C89
Q56

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