The shadow of ESG: how sustainable investing affects stock ownership and delisting

Abstract ESG-investors reallocate capital based on sustainability criteria, resulting in reshaped ownership structures and financing conditions. This study examines how these shifts impact the ownership structure of publicly listed firms and their likelihood of delisting. Using a comprehensive dataset of 24,788 funds managing USD 24 trillion in assets and 5699 stocks, we identify conventional investment funds and investment companies, such as private equity funds, as the main “counterparts” to ESG-investors. Furthermore, we find that firms with low ESG-investor ownership are more likely to be delisted, especially through private equity buyouts. These findings highlight the broader, unintended consequences of ESG-driven capital allocation.