ESG transparency in mutual funds prospectuses: empirical evidence from the EU and the US.

In recent years, environmental, social, and governance (ESG) considerations have become central to both corporate strategy and investment decision-making, representing key considerations for asset managers, policy markers, and business actors. Regarding this phenomenon, this thesis investigates how ESG disclosure in mutual fund prospectuses relates to fund inflows, with particular attention to differences between European and U.S. funds. Unlike prior studies that rely on external ESG ratings—often criticized for inconsistency—this work develops an objective measure of disclosure quality, composed of different scores that aim to capture precision, transparency, and content of communication. A fine-tuned ESG BERT model is employed to construct a machine- and human-tailored ESG dictionary and generate a disclosure quality score. The empirical analysis is based on a balanced dataset of 80 mutual funds (40 from Europe and 40 from the United States) that reflect the differing regulatory landscapes of the European Union's stringent frameworks (SFDR, CSRD) and the United States' largely voluntary approach. The study relies on two key research questions: (i) what are the main differences in ESG disclosure between European and U.S. mutual funds, and (ii) whether there is a relationship between ESG disclosure quality and mutual fund flows. Findings aim to contribute to the literature by offering a novel methodology for measuring ESG disclosure and by examining the relationship between funds’ disclosure quality and investor market reception.