Article

Ethical Investment: Whose Ethics, Which Investment?

Authors:
To read the full-text of this research, you can request a copy directly from the author.

Abstract

Ethical or socially responsible investment (SRI) is one of the most rapidly growing areas of finance. New government regulations mean that all pension funds are obliged to take such considerations into account. However, this phenomenon has received little critical attention from business ethicists, and a clear conceptual framework is lacking. This paper, by a practitioner in the field, attempts to fill this analytical gap. It considers what difference, if any, lies between the terms ‘ethical’, ‘green’, or ‘socially responsible’. It also tackles the difficult question of how any public form of investment can be called ‘ethical’ in an overtly pluralistic society. The paper provides an account of the historical development of ethical investment, and traces the evolution of the varying terms used to describe it. This is followed by a conceptual analysis of these terms, and a description of ethical decision-making in this context. The paper ends by considering the role of shareholder action within ethical investment, and assesses the utility of the stakeholder model as a theoretical justification.

No full-text available

Request Full-text Paper PDF

To read the full-text of this research,
you can request a copy directly from the author.

... Michelson et al. (2004) menggunakan kedua istilah ini secara bergantian. Meskipun demikian, terminologi investasi etis dipandang sebagai terminologi tertua yang kemudian secara perlahan digantikan oleh terminologi investasi tanggung jawab sosial (Sparkes 2001). Istilah investasi etis lebih umum digunakan di Inggris sementara istilah investasi tanggung jawab sosial lebih banyak dipakai di Amerika Serikat (Reich et al., 2001;Michelson et al., 2004). ...
... Aktivisme pemegang saham merupakan teknik (strategi) investasi etis berupa penggunaan hak suara, melalui kepemilikan saham biasa, untuk menegaskan dan mencapai tujuan politik, keuangan dan tujuan lainnya (Sparkes, 2001). Dalam kontek investasi etis, investor menggunakan hak suaranya untuk mendukung pengembangan etis suatu perusahaan (von Wallis dan Klein, 2015). ...
... Ada juga kelompok lain, yaitu lembaga masyarakat (NGO). Lembaga ini menggunakan strategi aktivisme pemegang saham untuk mengkritisi kegiatan perusahaan di bidang tertentu seperti lingkungan, hak-hak binatang atau kesejahteraan masyarakat lokal (Sparkes, 2001). ...
Article
Full-text available
Ethical investment has experienced very fast and high growth over the last decade. The growth and development of this investment occurs both at the local (Indonesian) level and at the global level. In Indonesia, the growth and development of ethical investment can be seen from the increasing number of ethical-based stock indices and the value of stock market capitalization in each of these indices. Meanwhile at the global level, it can be seen from the increase in the value of ethical investments, especially in the five main world markets, namely Europe, the United States, Japan, Canada and Australia and New Zealand. Underlying this phenomenon needs to be explored further on the issue of ethical investment. This article tries to explore more deeply ethical investing, especially regarding the concepts, basis for decisions and approaches (strategies) in ethical investment activities.
... During this period, researchers have proposed a large number of approximate terms of ESG. Some typical ESG investment terms include socially responsible investing [15][16][17][18] ethical investing [17,19] social investing [19] sustainable investing [20] (Weber, 2005), green investing [21,22]. It is worth noting that both ESG and CSR emphasize corporate behaviors that are beneficial to society. ...
... During this period, researchers have proposed a large number of approximate terms of ESG. Some typical ESG investment terms include socially responsible investing [15][16][17][18] ethical investing [17,19] social investing [19] sustainable investing [20] (Weber, 2005), green investing [21,22]. It is worth noting that both ESG and CSR emphasize corporate behaviors that are beneficial to society. ...
Article
Full-text available
Board gender diversity has garnered significant attention in recent years as a component of internal governance. The automobile industry is a conventional sector characterized by its significant scale and the board of directors has historically been predominantly male. The share of female board members increased due to the rapid development of the new energy vehicle industry, which emerged as a combination of high-tech and traditional cars, in the last two decades. This study examines the relationship between the proportion of female directors and the environmental, social, and governance (ESG) performance of companies in the automotive sector. This study collected data on the proportion of female board members and environmental, social, and governance (ESG) ratings for 50 automotive industry businesses across 13 countries from 2002 to 2022. The findings indicate a positive relationship between the proportion of female serving as directors and the environmental, social, and governance (ESG) performance of automotive industry. Furthermore, this study demonstrates that there was no delay in the favorable correlation between the proportion of female directors and the environmental, social, and governance (ESG) performance of companies in the automotive sector.
... It further undertakes the thematic review to elaborate the major themes prevalently identified in this subject and mapping the themes to establish linkage (Braun & Clarke, 2006). The brief summary of the entire execution plan of this study is represented in Figure 1 which adheres according to the Scientific Procedures and Rationales for Systematic Literature Reviews (SPAR-4-SLR) protocol, which consists Moskowitz (1972), Sparkes (2001), Renneboog et al. (2008), Irvine (1987), Cowton (1999), Schwartz (2003), Sparkes andCowton (2004) 1990s Green finance Green finance highlights the environmental dimension of financial strategies focused on promoting positive impacts on society (2019) Governments, NGOs, consulting groups, etc. ...
... It further undertakes the thematic review to elaborate the major themes prevalently identified in this subject and mapping the themes to establish linkage (Braun & Clarke, 2006). The brief summary of the entire execution plan of this study is represented in Figure 1 which adheres according to the Scientific Procedures and Rationales for Systematic Literature Reviews (SPAR-4-SLR) protocol, which consists Moskowitz (1972), Sparkes (2001), Renneboog et al. (2008), Irvine (1987), Cowton (1999), Schwartz (2003), Sparkes andCowton (2004) 1990s Green finance Green finance highlights the environmental dimension of financial strategies focused on promoting positive impacts on society (2019) Governments, NGOs, consulting groups, etc. ...
Article
The sustainable finance study is considered as an important study under the 2030 agenda for achieving sustainable development goals. It is assumed to include an investment decision-making process by directing capital towards sustainable investment and monitoring climate change under its core agendas. The study on sustainable finance is much diversified. There is no definition of sustainable finance which is applicable universally. The governments, financial institutions and several international organizations have considered framing a definition according to their approach and applicability. This article reviews the study conducted on the topic ‘sustainable finance’ to answer the question related to the meaning of sustainable finance and the areas covered under it. The study aims to explore the vast database of Scopus and Web of Science for the specified duration of 2002–22. The study tries to close the gap present in a diversification and interpretation of sustainable finance meaning, and it further draws the attention of the people concerned globally towards this less explored subject under the sustainability goal. There is abundant research undertaken in the various areas related to sustainability but very little in sustainable finance. The subject is majorly understood under the corporate governance spectrum despite having its relation with many other factors and also its individual impact on the industry growth, thus demanding a thorough review of the topic.
... In such vein, also Derwall et al. (2011Derwall et al. ( , p. 2137 state: "Socially responsible investing (SRI) has undergone tremendous development since it emerged as a faith-based initiative in the eighteenth century". SRI in its current form is often claimed to have emerged in the US during the 70s and early 80s as a consequence of concern for non-economic motives and became global practice by the early 2000s (Sparkes, 2002) sometimes focusing more on ethical and sometimes more on financial aspects. While Cowton (1999) summarizes the discussion on the different investment types as "matter of taste", Sandberg et al. (2009, p. 521) find that definitions of SRI are overwhelmingly consistent in the interpretation that they refer to an "integration of certain non-financial concerns, such as ethical, social or environmental, into the investment process". ...
... The results of Rosen et al. (1991) are also supported by a number of other studies showing that SR investors tend to be younger (e.g., Diamantopoulos et al., 2003;Hayes, 2001;Laroche et al., 2002). Focusing on further socio-demographic aspects, Sparkes (2002) shows that SR investors are well-educated and have a higher income. In this context, Tippet (2001) as well as Vinning and Ebreo (1990) show that SR investors are generally wealthier than their conventional counterparts, stating that they may be more willing to tolerate an "ethical penalty" (Williams, 2007). ...
Article
Full-text available
In recent decades, academia has addressed a wide range of research topics in the field of ethical decision-making. Besides a great amount of research on ethical consumption, also the domain of ethical investments increasingly moves in the focus of scholars. While in this area most research focuses on whether socially or environmentally sustainable businesses outperform traditional investments financially or investigates the character traits as well as other socio-demographic factors of ethical investors, the impact of sustainable corporate conduct on the investment intentions of private investors still requires further research. Hence, we conducted two studies to shed more light on this highly relevant topic. After discussing the current state of research, in our first empirical study, we explore whether besides the traditional triad of risk, return, and liquidity, also sustainability exerts a significant impact on the willingness to invest. As hypothesized, we find that sustainability shows a clear and decisive impact in addition to the traditional factors. In a consecutive study, we investigate deeper into the sustainability-willingness to invest link. Here, our results show that improved sustainability might not pay off in terms of investment attractiveness, however and conversely, it certainly harms to conduct business in a non-sustainable manner, which cannot even be compensated by an increased return.
... Despite this cluster of articles still in a stage of development, there are some initial lessons and future pathways to support retail investors' efforts to improve corporate behaviour. The main lesson is that investors can be effective through active engagement [77] and shareholder action [78]. Further, these articles present innovations and new applications for theory which can expand the strategies available to investors. ...
... The extensions presented are mainly around recognising the difference between rational investor and SRI investors [79]. They therefore involve extending to a more "economic psychology" approach [77] and using the utility from these stakeholder models to justifying investor actions [78]. ...
Article
Full-text available
Progress on Environmental, Social and Governance (ESG) issues is vastly different depending where in the world you look. However, the literature on what drives ESG performance is highly fragmented and current theories fail to offer useful insights into the disparity in ESG performance. Hence, this study draws upon an accumulated body of knowledge of ESG-related literature and explores the major drivers of ESG performance. By applying a scientific and replicable methodology of systematic literature review, this article reveals the fundamental debate underpinning ESG responsibility, the breath of pertinent stakeholders, the theories necessary to understand ESG management and the conditions which will best achieve ESG progress. The major themes help inform the most effective choice of mechanisms to improve ESG outcomes. However, there are also significant themes not yet fully developed in the literature. Future research is urgently needed on the impact of economic development, regulatory environment and responsible investing on ESG outcomes. These research trajectories hold important implications for investment management, corporate strategy and government policies affecting global ESG performance. https://www.mdpi.com/2071-1050/14/4/2322/htm
... It is s a process of identifying and investing in companies that meet CSR standards. Thus, one could say that CSR and SRI are essentially mirror images of one another, the former being from the company's perspective, while the latter describes the investor's perspective (Sparkes, 2001). ...
Article
Full-text available
This study investigates the impact of environmental sustainability on willingness to invest (WTI) in startups vs. established companies. Using data from a survey among private investors, we compare measures of WTI and the perceived return–risk ratio (RRR) for both environmentally sustainable and non‐environmentally sustainable startups and established companies. The results indicate that environmental sustainability significantly and positively influences WTI for both startups and established companies, with a notably stronger effect for startups. Non‐environmental sustainability significantly decreases WTI. Environmental sustainability has a significantly positive impact on the perceived RRR for both startups and established companies, although startups are rewarded more than established companies for environmentally sustainable practices. This highlights that entrepreneurs have a financial incentive to prioritize environmental impact, and the demand for environmental sustainability can provide startups with an advantage in capital raising. This research contributes to the limited literature regarding sustainable entrepreneurship and environmental sustainability's specific impact on WTI.
... The interest in extra-financial oriented investment has been gaining interest in the last decades through the concept of ethical or Socially Responsible Investment (SRI, Sandberg et al. 2009, Sparkes 2001, also referred to as Sustainable Investment pushing for the integration of these ethical aspects in the companies' policy through the Corporate Social Responsibility (CSR, Velte 2022) engagements of the companies aiming at conducting its activities in a sustainable and ethical way. The definition of CSR engagement of the companies has become mainstream. ...
... In recent decades, sustainable finance and investment, hereinafter referred to as sustainable finance, has served as an umbrella term to describe a myriad of closely associated concepts, such as impact investing (Clarkin & Cangioni, 2016;Schlütter et al., 2023), green investing (Falcone et al., 2018), climate finance (Giglio et al., 2021), socially responsible investing (Capelle-Blancard & Monjon, 2012), carbon finance (Zhou & Li, 2019), green finance (Zhang et al., 2019), and ethical investing (Sparkes, 2001). There is some controversy on the precise impacts of pursuing sustainable finance/investing and ESG for companies, particularly in the short term. ...
Article
Full-text available
Sustainable finance and investment has become an important factor in achieving environmental sustainability. Evidence also suggests it has become more prominent in the global financial system. Although academic interest has increased in recent years, most prior studies have investigated support for sustainable finance within corporate environments. Studies examining the support of individuals, or the wider public, are scarce. Consequently, using a Eurobarometer survey of 27,862 Europeans across all 27 EU countries, this study explores support for sustainable finance among people in Europe. We used a nested fixed effects model – with two levels – to examine the influence of sociodemographic factors, knowledge of sustainable finance, and a country's progress towards attaining the United Nations Sustainable Development Goals (SDGs). Our results show that sociodemographic factors are the most influential predictors of support for sustainable finance. We found that age, gender and living in rural/urban areas all influenced people's support for sustainable finance. Meanwhile, the influence of sustainable finance knowledge and SDG progress were either negligible or negative.
... Early literature like that of ethical investing predates more commonly used nomenclatures like responsible, ESG, and impact investing (Eccles & Viviers, 2011). However, there remains a deep body of literature on what exactly constitutes as ethical (Sparkes, 2001). A lack of consensus on how terms are defined makes it challenging to evaluate the precise proportion of investments that sit within each sphere (Schlegelmilch, 1997). ...
Research
Full-text available
Investment strategies and offerings reflecting investor values are increasingly prevalent, but the language used to describe this approach to investment varies widely - with terms such as ethical investing, responsible investing, impact investing, ESG investing, sustainable investing, and others appearing in promotional materials and the academic literature. Through 15 focus groups and a subsequent survey of 993 individuals, the perspectives of retail investors, regarding terminology to describe social enterprises that resonates with potential investors and the motivating factors behind their investing are explored. The purpose is to assist social enterprises in identifying the best language to use to attract investors. Focus group participants highlighted what they look for in investments reflective of their values and the challenges in finding these types of investment opportunities. Findings demonstrate that social enterprises should avoid traditional terms like impact, ethical, and responsible investing, in favor of terms that directly align with the mission, vision, and purpose of the firm when seeking to solicit capital from retail investors.
... Tuy nhiên điều quan trọng là phải xác định rõ sự khác biệt giữa SRI và đầu tư ESG, đặc biệt là các quy ước đặt tên có phần hơi nhầm lẫn trong lĩnh vực này (Eccles & Viviers, 2011). Định nghĩa được chấp nhận rộng rãi về SRI là một phong cách đầu tư kết hợp các mục tiêu tài chính với các mục tiêu xã hội và môi trường (Sparkes, 2001). Do đó, đầu tư ESG tránh được câu hỏi hóc búa về mặt pháp lý về việc xem xét các yếu tố xã hội hoặc môi trường liệu có phù hợp với lợi ích tốt nhất của người thụ hưởng hay không, vì trọng tâm cốt lõi của nó là tài chính và do đó, hợp lý về mặt kinh tế. ...
Article
Đại dịch Covid-19 đã gây nhiều khó khăn, tổn thất về người, kinh tế cho các doanh nghiệp tại Việt Nam cũng như trên toàn thế giới. Tuy nhiên, thống kê cho thấy doanh nghiệp nào theo đuổi chiến lược phát triển bền vững, công bố các chỉ tiêu ESG (Enviromental – môi trường, Social – xã hội, Governance – quản trị) trong nhiều năm qua luôn thu hút được sự đồng hành của các nhà đầu tư trong và ngoài nước. Bên cạnh đó doanh nghiệp cũng đã thể hiện khả năng thích ứng và tự tạo ra được “kháng thể” trước đại dịch; duy trì ổn định hoạt động và tăng trưởng trong kinh doanh, đóng góp tích cực trong việc thực hiện mục tiêu kép. Nghiên cứu này nhằm nhận diện rõ thực trạng công bố các chỉ tiêu ESG trong báo cáo phát triển bền vững hiện nay tại các doanh nghiệp niêm yết trên sàn giao dịch tại Việt Nam, từ đó đưa ra các gợi ý chính sách về giải pháp nhằm tạo điều kiện thuận lợi cho việc thực hiện công bố các chỉ tiêu ESG trong thời gian tới.
... An alternative and widely discussed perspective on SI is "sustainable investing via investment management firms". This concept dates back to 1898, when religious groups such as Quakers and Methodists followed "negative screening" and excluded "sin stocks" from their investment portfolios based on religious beliefs (Sparkes, 2001). This movement progressed further as investors became aware of social and environmental issues after the 1971 Vietnam War, the Chernobyl explosion and the Exxon oil spill. ...
Article
Purpose Sustainable investments (SI) represent a promising class of investments, combining financial returns with mitigating environmental challenges, achieving SDG goals and creating a positive business impact. An enhanced global focus on climate change developments in the backdrop of COP26 and COP27, raised the need for comprehensive literature mapping, to understand the emerging themes and future research arenas in this field. Design/methodology/approach The authors apply a quali–quantitative approach of bibliometric methods coupled with content analysis, to review 1,022 articles obtained from the Web of Science (WoS) database for 1991–2023. Findings The results identify the leading authors and their collaborations, impactful journals and pioneering articles in sustainable investment literature. The authors also indicate seven major themes of SI to be financial performance; fiduciary duty; CSR; construction of ESG-based portfolios; sustainability assessment tools and mechanisms; investor behavior; and impact investing. Further, content analysis of literature from 2020 to 2023 highlights emerging research issues to be SDG financing via green bonds and social impact bonds; investor impact creation via shareholder engagement and field building strategies; and governance related determinants of firm-level sustainable investments. Finally, the authors discuss the research gaps across these themes and identify future research questions. Originality/value This paper crystallizes research themes in sustainable investment literature using a vast coverage of globally conducted studies published in reputed journals till date. The findings of this study coupled with future research questions provide a well-grounded foundation for new researchers to further explore the emerging dimensions of this field.
... The authors refer to Sparkes' even earlier work from 2001, which argues that it is worth distinguishing between "ethical investment" and "socially responsible investment". The former includes value-based organisations (e.g., a church), while the latter represents social and environmental goals combined with financial goals (Sparkes 2001). However, based on Fan et al. (2022), the socalled sustainability-themed strategy, with an emphasis on investing in clean energy, has become a separate version of the newer ESG investment strategies. ...
Article
Full-text available
The development of the hydrogen economy (HE) has become the main direction of climate-focused economic progress. Although the gap between the potential impact of energy companies and their actual willingness or ability needs to be bridged by corporate governance and economic policy, these dynamics are underrepresented in the literature. As environmental, social, and corporate governance (ESG) considerations could foster adaptation and developing hydrogen technologies, the goal of this systematic literature review is to explore the specific environmental and energy aspects of ESG and the adaptation opportunities which could contribute to HE development. Findings suggest that ESG as a new institution in the economy might be in line with national and international policies, but corporate efforts at improving environmental performance could be further oriented directly or indirectly toward hydrogen technologies, for example, through cost reduction initiatives, favourable taxation, or specific requirements for sustainability reporting. On the corporate level, external and internal change drivers could lead to strategic and governance adaptation measures in line with HE development policy. The study contributes to the literature through the intersection analysis of the global ESG trend and the development policy of the HE, which has been overlooked to date, especially from a corporate governance perspective.
... Literature discusses that ESG factors include several terms such as sustainability practices (Alshehhi et al., 2018;Ameer and Othman, 2012;Vig and Datta, 2018;Giannarakis et al., 2014Giannarakis et al., , 2020Khan, 2022;Zahid et al., 2019;Ramba et al., 2021), ethical investment (Sparkes, 2001;Michelson et al., 2004), social investment (Dunfee, 2003;Waddock, 2003), responsible investment (Dembinski et al., 2003;Scholtens, 2014), sustainable finance (Sandberg, 2018;Chandrakant and Rajesh, 2022;Khan 2022), and sustainable investment (Cubas-Díaz and Martínez Sedano, 2018;Abate et al., 2021;Mulchandani et al., 2022). According to Fulton et al. (2012), CSR activities convert to ESG over time. ...
... However, the discussion about ethical investment has recently (re-)entered public discourse and observers' way of defining ethical property varies strongly. According to Sparkes [5], churches in the USA and UK have imposed "ethical" restrictions on investment decisions since the early 20th century. Unfortunately, no uniform definition of "ethical investments" exists. ...
Article
Full-text available
Moral luck refers to whether an actor is morally praised or blamed for an action whose outcome they could not influence. In two studies, we investigated the behavioral importance of this phenomenon in the realm of investments, which has become increasingly subject to ethical evaluations. In our first online experiment, we examined whether people’s moral evaluation of an investment decision depended on its arbitrary outcome and whether their interpretation of the nature of the decision was driven by this outcome. Our results showed that profitable investments were considered more moral than unprofitable investments. Moreover, profitable investments were labeled “investments” instead of “speculation” or “gambling” more often than unprofitable ones. In our second study, we asked the subjects to assess investments independent of the outcome. After the outcome was announced, the subjects were given the opportunity to reflect and change their initial decision. The results show that people change the moral evaluation and label of investments when told that it had a bad outcome. This observation was stable across different investment contexts. These findings suggest that we must be careful with the increasing moralization of investment decisions and be sensitive to our cognitive biases.
... Mubarok (2022), after exploring the existing ethical investment literature, explained that the term ethical investment is synonymous with the term socially responsible investments (SRI) (Sandberg et al., 2009; Cowton, 2018), even Michelson et al. (2004) use the two terms interchangeably. Nevertheless, the term ethical investment is seen as the oldest terminology which is slowly being replaced by the terminology of socially responsible investment (Sparkes 2001). Some academics view the term socially responsible investment have narrower scope than the term ethical investment. ...
Article
The purpose of this article is to explore in depth the literature on the theories and models that underlie ethical investment research. Through a literature review study, the research found 10 journals that are ready to be reviewed. The literature search found several theories and models that underlie ethical investment research. The theories and models include agency theory, Angel and Rivoli model (1997), Heinkel, Krause and Zechner model (2001), Barnea, Heinkel and Krause model (2005) and Hypothesis Model of Ethical Investment and Stock Price Relationship of Derwall, Koedijk and Ter Horst (2011).
... In biblical times, Jewish Law laid down the directives for investing 'ethically'. The roots of SRI can be traced back to various religious movements as the original ethical investors were church investment bodies (Sparkes, 2001). In the mid-1700s, John Wesley (founder of Methodism) noted that wise use of money is an important part of New Testament teachings (Schueth, 2003). ...
... apply normative criteria to their investments are taking a position on broad social responsibilities beyond financial imperatives, where impact investing can be seen as a form of social responsibility practice (Ransome & Sampford, 2010;Sparkes, 2001). We understand REI as an ethical behaviour with ethical intentions, undertaken by investors who sometimes face ethical tensions. ...
Article
Full-text available
This article explores impact investing within the renewable energy sector. Drawing on ethical decision making and sensemaking, this article contributes to an enhanced understanding of the complex ethical sensemaking process of impact investors when facing plausible situations in a world of contested truths. Addressing the ethical tensions faced by impact investors with mixed motives, this study investigates the way decision makers use context-specific reasons to make sense of and shape the renewable energy investment (REI) process. This represents an initial attempt to understand ethical sensemaking in impact investing made within the renewable energy (RE) sector using a multi-stakeholder approach. Our findings show that prosocial, personal, reputational, and economic motives are the main drivers of REI, with prosocial and personal motives being value-based, and reputational and economic motives being evidence-based. We find three different modes of ethical sensemaking (pragmatic, retrospective, and forecasting), allowing for the construction of the four motives noted above. These motives are based on the context-specific reasons of impact investing decision makers in the RE sector. This article contributes to the academic discourse on ethical sensemaking with some key processes involved in ethical decision making, and a better understanding of the underlying motivations of impact investing in the RE sector.
... One way for private investors to exert pressure on corporations to do so is through investments in funds that not only focus on financial returns but that also focus on societal values. Socially responsible investment (SRI) refers to investment practices that in addition to financial aspects include environmental and social concerns (Sparkes 2001;Sparkes and Cowton 2004;Dijk-de and Nijhof 2015). Other terms with similar or identical meaning as SRI include ethical investment, responsible investment, sustainable investment and impact investment (Dumas and Louche 2016;Apostolakis, van Dijk et al. 2018;Agrawal and Hockerts 2021). ...
Article
Full-text available
The aim is to investigate the value basis of Socially Responsible Retirement Investments (SRRI) in a study of Swedish pension investors in the age range 18 to 65 years (N=1005). Logistic regression analyses were performed with self-reported SRRI choice as dependent variable and different levels of values as independent variables. On a higher level of analyses, self-transcendent values, especially universalism (e.g., equality, protecting the environment, and social justice), have the most important influences on SRRI choice. In contrast, on a lower-level analysis, SRRI choice is influenced by self-enhancement values with high priority for authoritarian power and low priority for wealth. The three-level analysis of values (self-transcendence vs self-enhancement value orientation, motivational domain, and value) questions the contradiction between dimension poles of values and the structuring of values in interrelated motivational domains. The results thereby clarify some previous findings and increase the understanding of the value basis of SRRI.
Chapter
This chapter begins by defining sustainable finance and tracing its historical development. It identifies key stakeholders in the sustainability landscape and discusses their roles and motivations. The chapter then explores how various entities such as corporations, governments, NGOs, financial institutions, and consumers contribute to and influence sustainability efforts. It also delves into the broader concept of sustainability, which encompasses economic, environmental, and social integration. The chapter highlights the essential role of environmental, social, and governance (ESG) criteria in guiding the financial sector toward a sustainable future, emphasizing both the ethical imperatives and the strategic financial benefits of ESG integration. The chapter also examines the role of digital measurement, reporting and verification (MRV), and how technological advancements are transforming the financial services landscape, offering new opportunities for sustainable growth and alignment with global carbon reduction targets. It concludes with significant developments within major Climate Tech and Ag Tech companies that are innovating green transition.
Chapter
In light of the urgent ecological and social challenges facing our world, there has been a noticeable shift in focus towards exploring economic models that prioritise ecological constraints and societal well-being over the pursuit of continuous growth and profit maximisation. These alternative perspectives collectively fall under the overarching term of post-growth economic models and the financial sector has significant influence over the real economy, and the investments made within it can either perpetuate destructive traditional practices or contribute to the construction of sustainable, regenerative, and inclusive economic and social structures. Therefore, this chapter aims to delve into the role of existing sustainable investment strategies, such as ESG (Environmental, Social, and Governance) Investment and Impact Investment, in the transition to a post-growth era. It also aims to examine the new transformative investment frameworks that have emerged in response to the shortcomings of current investment models in facilitating this transition.
Article
According to traditional portfolio theories constraints, restrictions, and screens applied in portfolio selection reduces the diversification opportunities which can impact financial performance. Is this true in the case of socially responsible investment (SRI)? To answer this, present study analyzes the performance of Socially Responsible (SR) indices in comparison to conventional indices in an emerging economy. The uniqueness of the study is that it analyses the performance of Shariah, ESG, and thematic indices in a single study. Further, the study measures the impact of Covid‐19 on them. Comparative performance evaluation was conducted by using absolute return analysis and risk‐adjusted measures namely, Sharpe ratio, Treynor ratio, tracking error, information ratio, capital asset pricing model (CAPM), Fama–French three‐factor, and Carhart's four‐factor models. The Structural break was identified, hence analysis was conducted for the total period (January 2017–March 2023) and two sub‐periods, that is, pre and post‐Covid‐19 period. No significant difference was found between the returns of SR indices and conventional indices as against the benchmark index on the basis of absolute return analysis. Sharpe ratio and Treynor ratio both were having negative values for all the SR and conventional indices. Tracking error for all the SR and Conventional indices were very low. The CAPM and both multi‐factor models univocally pointed toward the underperformance of all the SR (except S&P BSE 100 ESG index which had equal performance) and both conventional indices against the benchmark index. Noteworthy point is that only Shariah indices gave the highest returns during post‐Covid period. This research will help in deepening the SRI in the capital market. Companies should increase their ESG scores and make efforts to be listed on the SR indices. Policymakers should announce some kind of rebates, or recognition for star‐performing companies in the field of sustainability to encourage other companies to adopt SR practices in their business operations. The novelty of the current study is that it adds to the socially responsible literature by analyzing the performance of Shariah, ESG, and Thematic indices and conventional indices in a single study in the fastest‐growing economy of India and analyses the impact of Covid‐19 on this performance.
Chapter
This chapter explores the evolving academic perspective on the nexus between climate change, finance, and responsible investment. Within the global academic landscape, there's an intensified emphasis on the intricate relationship between business practices and the urgent issue of climate change. Specifically, the finance domain is at the forefront, delving into the financial implications of environmentally conscious decisions and how they shape the modern investment arena. As the discourse progresses, studies have underscored the growing significance of climate-related risks for institutional investors, suggesting that contemporary financial strategies are increasingly attuned to climate considerations. There's also a marked rise in publications illustrating the link between climate concerns and investment behaviors, emphasizing the synthesis of ethical considerations with financial strategies. Echoing broader societal shifts, the academic sphere presents climate change as an immediate concern, necessitating a proactive response from the influential investment community. This chapter employs bibliometric techniques to methodically examine the research literature evolution. It identifies the most relevant authors, the theoretical framework they built to support their contributions, and the various themes they developed around the topic. This way, we provide objective grounds for further studies and also identify potential gaps that could be addressed. Note: This book will be published in June 2024.
Chapter
Full-text available
This chapter explains how socially responsible investing (SRI) has evolved in the last few decades and sheds light on its latest developments. It describes different forms of SRI in the financial markets and deliberates on the rationale for the utilisation of positive and negative screenings of listed businesses and public organisations. It also presents key theoretical underpinnings on the subject and reports that the market for the responsible investments has recently led to an increase in contractors, non-governmental organisations (NGOs), and research firms who are involved in the scrutinisation of the enterprises' environmental, social, and governance (ESG) credentials. This contribution raises awareness on the screenings of positive impact and sustainable investments. It puts forward future research avenues in this promising field of study.
Chapter
This chapter is dedicated to a diachronic linguistic analysis of the—mainly legal and regulatory—language that the European Union has been using since 2002 up until 2022 to refer to SRIs. After a short and essential overview about the academic debate connected to the definition of SRI, I attempt to test the terminology implemented by some European institutions in relation to the semantic field connected to the notion of the socially/sustainable responsible investments. This linguistic analysis is performed using the online software Sketch Engine, that is, specifically dedicated to corpus linguistics. I try to verify if the change in the meaning of the acronym SRI can be measured over time and to which direction it points. The results show that the EU institutions—particularly the Commission through the ground-breaking “Taxonomy”—not only tried to legally regulate the recent growth of the financial phenomenon of SRIs but also were front runners in the attempt to guide this process. I show that the EU, though not completely ruling out the social and “moral” issues that were originally encompassed in the idea of SRI, has however significantly contributed to the shifting of this concept to a mainly environmentally related issue.
Article
Full-text available
This article explores the risk and return characteristics of socially responsible investment and faith-based mutual funds before and after the market crisis of 2008. Findings show a high level of correlation between the indices studied as well as a higher volatility than the S&P 500. We also find a significant shift in the mix of performance and volatility of these funds before and after the crash of 2008. This is an important consideration for both planners and investors in making an informed decision that is tempered by both the intensity of their social or faith based investment preferences and resultant risk and return on those investments.
Article
Environmental, social, and governance (ESG) investing is synonymous with sustainable investment for socially responsible investors. Unfortunately, the diversity of ESG investing remains unattended amidst the growth in ESG literature, as the academic literature focuses dominantly on measuring performance. An understanding of a wide range of subjects entailing ESG is required before future research on ESG investing is performed. To overcome the challenge, this systematic literature review uses bibliometric mapping to reveal four significant research themes within the ESG investing literature: investor behavior and motivations for ESG investing; cost and risk mitigation in ESG investing; portfolio screening and ESG investing; and ESG performance. The review critically examines each theme and broadens the research agenda for future studies. In addition to the significant themes, this paper also discusses theoretical and recent research trends in the ESG investing literature. The review identifies clashes and crossovers between these themes to appropriately interpret one theme using another and emphasizes the heterogeneity in ESG investing. Lastly, discussion over concerns and criticisms of ESG investing highlights greenwashing as a major cause of concern for investors.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Chapter
Psychologists have been observing and interpreting economic behaviour for at least fifty years, and the last decade, in particular, has seen an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference resource dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods – including laboratory experiments, field experiments, observations, questionnaires and interviews – the Handbook covers aspects of theory and method, financial and consumer behaviour, the environment and biological perspectives. With contributions from distinguished scholars from a variety of countries and backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics. It will appeal to academic researchers and graduates in economic psychology and behavioural economics.
Article
Full-text available
The importance of sustainable and responsible investment strategies has significantly risen due to the increasing cognizance concerning environmental stability and socioeconomic development of countries. Responsible investment strategies take Environmental, Social and Governance (ESG) aspects into investment consideration to enhance risk management and generate sustainable yields for investors. Therefore, the purpose of this paper is to examine the influence of ESG factors on the performance of Indian public limited companies in terms of profitability and the value of the firm through multiple measures of return on asset and Tobin’s Q ratio. The authors used annual ESG data of 65 Indian firms listed on the NSE 100 ESG Index database, covering the period from 2015 to 2017. Random effect panel data regression analysis was used to test the influence of ESG factors on the economic performance of the firms. The findings of the study indicate that good corporate ESG performance enhances financial performance evaluated through accounting as well as market based measures. The findings have practical implications for corporates, investors, regulators, as well as policymakers. The study highlights the need for adoption of sustainability reporting, including disclosure of ESG scores. This would go a long way in improving sustainable business practices and long-term viability of the shareholders’ wealth
Article
Socially Responsible Investments (SRI) have occupied the centre stage of discussion in the finance and social discourses. This study aims to unravel the intellectual structure of the research on SRI. At present, SRI is under-theorized, and the extant literature is divided into multiple fragments. Existing review studies on SRI suffer from limitations related to definitions and methods. We organize the theoretical lines of extant research and tie them up with empirical studies in the field by using systematic literature review and bibliometric techniques on a corpus of as large as 976 research articles. Our study describes the current dynamics of the SRI field, clusters the fragments of research into meaningful themes, highlights the impediments to current research and also proposes an agenda for future research. Although research on SRI occurs globally, the lack of academic collaboration amongst scholars along with under-theorization are two major challenges of the field. Future research could examine ESG-based asset pricing models, sustainable factor investing and measures to tackle greenwashing. Keywords: Socially Responsible Investments, Sustainable Development, ESG, bibliometric analysis, systematic literature review, research agenda
Article
Socially responsible investment (SRI) suffers from a lack of investment from individuals and has for the past 30 years been driven mainly by professional investors. We underline that on average, individuals from the UK (n=560) and the US (n=472) have four misconceptions about SRI investments: (i) SRI investments underperform classical ones (ii) SRI investments are shunned by “wall street investors” (iii) The idea of SRI emerged 5 years ago (iv) SRI requires higher management fees. We show that such misconceptions are linked to a lower propensity to have invested in SRI. We further show that in the US, misconceptions about SRI are related to lower financial literacy scores. We thus call for boosts in the form of education programs, in addition to nudges already proposed in the literature, in order to promote SRI.
Article
Entrepreneurs will play a critical role in developing the technological solutions to achieve a successful transition to net carbon zero. Their ability to develop these innovations into market ready products requires access to finance. Angels play a critical role in financing the start of the entrepreneurial pipeline. However, their actual and potential role investing in green/clean businesses is not considered in either the business angel or socially responsible investment literatures. This article addresses this omission. It asks what motivates business angels to invest in green/clean tech businesses and how the weight of green/clean tech in their portfolios impacts the motivations to invest in this sector. Based on interviews with 65 investors, we show that the motivation of business angels for investing in green/clean tech opportunities differs according to the proportion of their investment portfolio that comprises green/clean tech investments. Those angels who invested solely in green/clean tech gave a higher weighting to economic motivations and lower weightings to Altruistic and Hedonistic motivations. Angels with less exposure to green/clean tech in their portfolios gave a higher weighting to Altruistic motivations and had lower weightings for economic and hedonistic motivations. Our findings have implications for policy-makers and to green entrepreneurs.
Chapter
Finance has been increasingly acknowledged as key to sustainable development as it can efficiently and effectively channel resources towards sustainable activities. However, conditions for this to happen are not met yet. Lack of homogeneity in terminology and definitions translates into lack of comparability of sustainability-related disclosures and investment options. The assessment of non-financial risks and performances is impaired by little sustainability-related information. Metrics and analytical tools such as scenario analysis are still underdeveloped. Short-termism underpinning preferences and choices of economic agents hinder integration of sustainability into decision-making processes. The ambitious program of reforms undertaken by the European Union also with respect to financial legislation aims to address the above-mentioned issues and promotes a new conceptual framework enabling the development of sustainable finance.
Chapter
The objective of the contribution is the analysis of how ESG factors are affecting the decision-making process of institutional investors. To that end, the key drivers underlying the broad-based shift towards sustainable investments and the main sustainable strategies are considered and a picture of ESG fund market trends is provided. Then the contribution moves on to sift, from a regulatory point of view, the amendments to the legal framework aiming at integrating ESG factors in management companies’ decision-making process as well as at spotting the distinctive features of ESG products. The conclusions are focused on the challenges the institutional investors are facing: the real ESG impact of the managed portfolio and how this is intertwined with the limitations of ESG ratings.
ResearchGate has not been able to resolve any references for this publication.