We assess the sustainability footprint of mutual funds through the holdings they have. Rather than relying on
ESG metrics, we define the sustainability of a company by its impact on the 17 UN's Sustainable Development
Goals (SDGs). We document that on average, funds positively aligned with SDGs attract inflows only if
they have a clear sustainability object in their prospectus or other regulatory filings. For funds that do not
have a clear sustainability object, the relation is opposite: those that are more aligned with the SDGs, attract
fewer flows. When we decompose scores in their positive and negative component, we find that is mainly the
negative component to drive these results. These findings highlight the fact that sustainable investors act more
by using an exclusion approach when comes to allocate their assets This suggests that, despite investors prefer
sustainable funds, investors limit their actions to exclude funds that are negatively aligned with SDGs rather
than increase the inflows in funds that are positively aligned. These findings highlight the fact that investors
divest from non sustainable funds into “neutral” funds, instead of contributing to SDGs advance by investing
in positively aligned funds.