ESG Integration and the Investment Management Process: Fundamental Investing Reinvented

Duuren, Emiel van; Plantinga, Auke; Scholtens, Bert

doi:10.1007/s10551-015-2610-8

Cited by 436 publications

(276 citation statements)

References 16 publications

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“…Furthermore, the European Union already passed several directions on ESG among European firms (Sassen et al., ). Contrary, the US is characterized by a higher skepticism about a positive relation between ESG and improved financial performance (Duuren, Plantinga, & Scholtens, ). Thus, assuming a low integration of ESG in corporate and investment behavior, US companies might suffer from a higher exposure to ESG related risks, especially in context of the still growing interest and further standardization of ESG (Desclée et al., ).…”

Section: Resultsmentioning

confidence: 99%

ESG in credit ratings and the impact on financial markets

Kiesel

Lücke

2019

Financial Market

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This study examines environment, social, governance (ESG) consideration in rating reports published by credit rating agencies. 3,719 Moody's credit rating reports between 2004 and 2015 are examined and the ESG consideration is analyzed using a latent dirichlet allocation (LDA) approach. We further analyze the stock returns and credit default swap (CDS) spread changes to check whether ESG consideration has an effect on the capital market reactions. We find a small but present consideration of ESG in rating decisions. Within ESG, corporate governance plays the most important role. Moreover, the results reveal that ESG consideration is a significant determinant in the stock return and CDS spread around the rating announcement. We find that all ESG criteria are important for equity and debt investors.

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Section: Resultsmentioning

confidence: 99%

ESG in credit ratings and the impact on financial markets

Kiesel

Lücke

2019

Financial Market

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“…The local context also seems important for explaining the similar performance between conventional and SR funds. Indeed, Sweden is a mature market for SR, in which investors, institutions and fund managers in general are sensitive to social issues (van Duuren, Plantinga, & Scholtens, ). In this type of environment, there are several arguments to explain the similar performance of SR funds relative to their conventional peers.…”

Section: Discussionmentioning

confidence: 99%

The performance of socially responsible equity mutual funds: Evidence from Sweden

Leite

Cortez

Silva

et al. 2017

Business Ethics: A Eur Rev

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This paper presents a comprehensive analysis of socially responsible (SR) funds in Sweden by assessing fund managers' abilities and performances across different market states. These issues are analyzed at the aggregate and individual fund levels. The paper also presents several new statistical tests that allow more precise inferences about differences in performance and the variability in fund returns arising from different benchmarks. In general, SR and conventional funds perform similarly to the market. At the aggregate level, SR funds investing in Sweden and Europe perform similarly to conventional funds, while those investing globally tend to underperform. This underperformance seems to be linked with poor selectivity abilities of global SR fund managers. For individual funds, the performance of both types of funds is more similar. Most funds perform similarly in crisis periods compared to non‐crisis periods. Overall, our results are consistent with a mature market for SR investing and support the view that the similar performance of SR and conventional funds is associated with the mainstreaming of SR investment in Sweden. These findings encourage SR investing both by socially conscious investors, who wish to align their social values with their investment decisions, as well as by conventional investors, who will not be penalized by investing in these funds. We also call attention to the difficulties investors face when trying to identify funds with high social standards, considering that there is scarce information on the extent to which each fund (SR or conventional) holds stocks that comply with ethical and social criteria.

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“…Large investors undertake most SRI, whereas retail investors comprise a small fraction of total SRI and are usually involved share the same goals, and thus, various types of investors can coexist (Derwall, 2011). Sustainable rating agencies and sustainable indices are the primary referents in terms of corporate sustainability assessment for the sustainable investment market (Duuren et al, 2015). However, investment proposals do not explicitly consider the differences mentioned above, nor do they integrate the investment preferences of a variety of investors.…”

Section: Sustainable Institutional Investment and Integration Of Invementioning

confidence: 99%

Integrating multiple ESG investors' preferences into sustainable investment: A fuzzy multicriteria methodological approach

Escrig-Olmedo

Rivera-Lirio

Torres

et al. 2017

Journal of Cleaner Production

106

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Preprint: Escrig-Olmedo, E., Rivera-Lirio, J. M., Muñoz-Torres, M. J., & Fernández-Izquierdo, M. Á. (2017). Integrating multiple ESG investors' preferences into sustainable investment 1 Integrating multiple ESG investors' preferences into sustainable investment: A fuzzy multicriteria methodological approach AbstractThe integration of environmental, social and governance (ESG) criteria into the evaluation process of assets is a theme that is widely accepted among socially responsible investors. In this process, however, the integration of investors' preferences has not been adequately developed. The challenge is to integrate the preferences of heterogeneous investors-not only conventional investors but also investors who are particularly sensitive to sustainability issues (socially responsible investors)-considering that socially responsible investors are not necessarily homogeneous. This paper attempts to address this challenge by developing a methodological approach based on an application of fuzzy multicriteria decision-making methods (MCDM) to integrate ESG investors' preferences, as jointly considered. Because investors' preferences may vary depending on which material aspects are considered within a sector, this study has been tested using clothing-sector data. Results confirm the usefulness of the methodological approach proposed for a proper generation of a 'commercial solution' that integrates the preferences of various investors and simultaneously is consistent with individually defined preferences. IntroductionThis study proposes a methodological tool for assessing the sustainable production and management of companies with the aim of improving the integration of multiple environmental, social, and corporate governance (ESG) investor preferences that must act together. This tool could be translated for use in the financial markets in the case of institutional investors' decision-making process.Sustainable investment is considered a comprehensive term for what is known as responsible investment, socially responsible investment (SRI), or ESG investment (Utz et al., 2015). Following authors such as Busch et al. (2016), this paper is based on the term 'sustainable investment' as a general term to define an investment process that has a potential positive impact on sustainable development through the integration of not only financial concerns but also long-term ESG criteria into investment decisions. On this basis, in this study socially responsible investors (SR investors) are defined as those which adopt a long term investment horizon (Guyatt, 2005), expecting returns no lower than other investors; although, some are willing to sacrifice returns for corporate sustainability (Statman et al., 2008).According to Eurosif (2014), the key driver of the sustainable-investment market remains institutional investor demand. Pension funds form a subset of institutional investors with a long-term perspective (Neubaum and Zahra, 2006). In this setting, the investment strategies developed by institutional investors i...

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ESG Integration and the Investment Management Process: Fundamental Investing Reinvented

Cited by 436 publications

References 16 publications

ESG in credit ratings and the impact on financial markets

ESG in credit ratings and the impact on financial markets

The performance of socially responsible equity mutual funds: Evidence from Sweden

Integrating multiple ESG investors' preferences into sustainable investment: A fuzzy multicriteria methodological approach

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