Socially responsible investment strategies for the transition towards sustainable development: the importance of integrating and communicating ESG

Abstract

PurposeRecently, socially and responsible investments (SRI) have constantly grown becoming a highly discussed issue. Therefore, the main purpose of this paper is to better understand if environmental social governance (ESG) criteria integration in investment strategies can support the transition of finance toward a more sustainable growth.Design/methodology/approachAn explorative analysis based on a multiple case study has been conducted and addressed by a content analysis on the Key Investors Information Documents (KIIDs) that the sample companies published for 2020.FindingsThe achieved results demonstrated that the case companies differently integrated ESG into their SRI; thus, if some of them are quite near to a full integration, the others demonstrated less than a full commitment with ESG. This seems to be mainly due to the different approach that asset management companies (AMCs) and/or managers have adopted for integrating ESG criteria.Research limitations/implicationsEven though the achieved results offered some interesting insights for asset managers, the explorative and qualitative nature of this study and the small sample investigated somewhat limits it.Practical implicationsAMCs, consultants and managers in developing and implementing their SRI strategy could be much more focused on the importance of ESG integration for the transition toward a more responsible and sustainable finance (micro-level) as well as a more sustainable development (macro-level).Originality/valueThe paper provides new insights into the essence of SRI strategies and their potential to contribute to sustainable development. Thus, it tries to shed new lights on the role that ESG can have to stimulate and support investment decisions and, in so doing, contributing to make finance grow more sustainable.

Recycling Technology Innovation as a Source of Competitive Advantage: The Sustainable and Circular Business Model of a Bicentennial Company

“…It should be noted that the ESG (Environmental, Social, Governance) criteria are key for investment decision-making and for encouraging more sustainable finances in pursuit of a sustainable development that integrates financial and non-financial indicators [2]. Environmental problems are well known nowadays, and companies and regulating agencies perceive the importance of environmental, social and governance activities (ESG) [3].…”

“…ESG takes into account the effect the company has on the environment, both directly and indirectly; considers the company's impact on its local surroundings; and refers to the corporate governance of the company. Moreover, the pandemic caused by COVID-19, as well as financial and social world crises, have propelled ESG at different levels [2][3][4].…”

Performance of Socially Responsible Investment Funds in China: A Comparison with Traditional Funds

“…For scholars [10,11], the transition toward sustainable development allows for a rapid restructuring of institutions toward more effective governance and with a stronger emphasis on planetary concerns in investments, which shows how much the role of finance has changed. In the past, the goal of all companies was maximizing shareholders' wealth, whereas currently a lot of companies care about environmental issues, such as the green economy and the climate change [12,13]. The integration of CSR and ESG criteria into SRI strategies justifies investment decisions including decisions of institutional investors, which play an essential role in the transition toward a more responsible and sustainable finance (micro-level), as well as toward a more sustainable development (macro-level) [12,14].…”

“…In the past, the goal of all companies was maximizing shareholders' wealth, whereas currently a lot of companies care about environmental issues, such as the green economy and the climate change [12,13]. The integration of CSR and ESG criteria into SRI strategies justifies investment decisions including decisions of institutional investors, which play an essential role in the transition toward a more responsible and sustainable finance (micro-level), as well as toward a more sustainable development (macro-level) [12,14]. With the rapid development of the Chinese economy, people's living standards are gradually improved.…”

Good Governance and Sustainable Investment: The Effects of Governance Indicators on Stock Market Returns

“…However, DJSI-AP was likewise shown to be less dangerous than DJ-G. After that, Sharma et al (2020) discovered that financial and market success had a favorable and substantial influence on ESG disclosure in Indian enterprises registered on the Bombay Stock Exchanges. Furthermore, Sciarelli et al (2021) highlighted in their research the necessity of integrating and communicating ESG. Enhancing communication and sharing of environmental and social effects SRI might assist in attracting more investors and long-term sustainability.…”