Green Analysts

We study the value of green analysts, referring to financial analysts with domain knowledge in environmental and sustainability issues. The prevalence of green analysts, identified through their educational background or work experience, has risen steadily over time. Compared to peers, green analysts engage more in sustainability-related discussions during earnings conference calls. Markets respond disproportionately to their downside recommendations, reflecting investors' heightened attention to ESG-related downside risks. The exception is socially responsible investors, who also react to their upside recommendations by increasing ownership. Further analysis confirms that green analysts provide unique forward-looking sustainability insights. Exploiting broker closures as exogenous shocks, we document that green analyst coverage enhances corporate sustainability outcomes and attracts sustainability-focused investors. Our findings highlight the significance of green analysts in shaping market perceptions, guiding capital allocation, and disciplining firms' sustainability practices.