This study analyzes whether investors take risks related to environmental, social and governance (ESG) factors into account when making portfolio decisions. We exploit the new Morningstar’s ESG risk indicators -“ introduced at the end of 2019 -“ to estimate the effect of ESG risk perception on investment fund flows. Our exercise, related to the early phase of the Covid-19 crisis when uncertainty skyrocketed, shows that investors have preferred low-ESG-risk funds, with environmental risks remaining a top concern.
