Early movers in sustainability How can early adoption of the Taskforce on Nature-related Financial Disclosures increase financial returns for asset managers?

Abstract

As environmental risks are at the forefront of financial markets, nature-related dis- closures have gained momentum. This thesis investigates how early adoption of the Taskforce on Nature-related Financial Disclosures (TNFD) influences returns for asset managers. By applying a Difference-in-Differences methodology to matched samples of early and late adopters within East Capital’s portfolio, the study assesses short-term financial impacts using rolling average returns and rolling Sharpe ratios. Early adopters perform poorly in the short run. These results are contextualized using signaling theory, the Efficient Market Hypothesis, behavioral finance, and the early-mover advantage literature. The findings suggest that the effectiveness of vol- untary ESG signals, such as the adoption of TNFD, is shaped by credibility, investor attention, and market maturity. The thesis contributes to understanding when and how sustainability disclosures translate into competitive financial outcomes, offering implications for asset managers navigating ESG integration and strategic position- ing.