We study how green disclosure shapes portfolios and green investment. Disclosure polarizes shareholders and greenness outcomes: green investors concentrate in green firms and push them to become greener, while brown firms are held by less-green investors and reduce greenness. Because brown firms typically have cheaper opportunities to increase greenness, this sorting reduces aggregate greenness and imposes an externality cost despite improving allocative efficiency. Disclosure alone is not always welfare-improving and is complementary to externality-correcting policies such as carbon pricing. Welfare-maximizing managers overdisclose because they internalize disclosure's allocative gain but not its externality cost; price-maximizing managers can deliver higher welfare.