Abstract

Although an increasing number of papers analyze losses due to natural disasters, there is no evidence that climate change events have an impact on Sustainable Investment Decisions. Our paper proves, by using data on natural disasters, that these natural disasters have a substantial influence on the returns of Exchange-traded Funds (ETF), showing that investors react to natural disasters by investing in sustainable financial products. Our findings suggest that large-scale natural disasters significantly increase investors’ preferences for sustainable ETFs. Finally, we also provide evidence that investors’ sentiment toward the sustainability theme has changed over time.