The Performance of Socially Responsible Investments

Latinović, Milica; Obradović, Tijana

doi:10.15678/eber.2013.010203

Cited by 4 publications

(4 citation statements)

References 62 publications

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“…There is an abundance of academic and non-academic literature on sustainable investing, ESG-based investing and impact investing (Cole et al, 2020;Latinovic & Obradovic, 2013). While some academics and non-academics use these terms interchangeably each term has a different meaning and purpose.…”

Section: Literature Reviewmentioning

confidence: 99%

Divest or engage? Effective paths to net zero from the U.S. perspective

Buks¹,

Sobański²

2023

EBR

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The aim of this article is to critically review and evaluate two ESG-based investment strategies—divestment and engagement for alignment of investment portfolios with climate change mitigation goals of the United Nations. The article compares both approaches in terms of their effectiveness of decarbonization, using the case study method. First, the case on fossil fuels divestment by Harvard Management Company is analysed. The second case study discusses shareholder engagement endeavors by Engine No. 1 hedge fund and its investment in ExxonMobil. The findings indicate that divestment may have non-immediate impact on corporate behavior and carries political and legal retribution risks. Engagement, on the other hand, presents itself as a more plausible option as it takes less time to deploy and, therefore, can produce more immediate and impactful results. Nevertheless, both divestment and engagement can play mutually supportive roles in addressing climate change by the investment industry.

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Section: Literature Reviewmentioning

confidence: 99%

Divest or engage? Effective paths to net zero from the U.S. perspective

Buks¹,

Sobański²

2023

EBR

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“…Rathner, 2012; Latinovic and Obradovic, 2013;Dias Curto and Vital, 2014;Pouget, 2014;Sliwinski and Lobza, 2017;López-Arceiz et al, 2018;Risalvato et al, 2019); 4. There is also evidence pointing out that investors tend to hold diversified portfolios, composed by SRI and conventional investments.…”

Section: Literature Review: Sri Economic Growth and Dynamic Modellingmentioning

confidence: 99%

Optimal growth under socially responsible investment: a dynamic theoretical model of the trade-off between financial gains and emotional rewards

Gomes¹

2020

Int J Corporate Soc Responsibility

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Socially responsible investment (SRI) evolved, along the last two decades, from an almost unexplored topic in science to a recurrent theme of research and debate in Economics and Finance. The growing interest on the theme has two fundamental causes. On one hand, empirical evidence unveils a change of behavior of investors, who typically no longer restrict their decision-making to a strict financial analysis; ethical, social, environmental, and political concerns are also on the forefront of investors’ assessments. On the other hand, the economic science is witnessing a paradigm shift characterized by a progressive departure from the orthodox rational deliberation framework and in the direction of the introduction of behavioral elements. In this study, an intertemporal model is proposed to serve as a benchmark for the evaluation of the implications of social and environmental awareness upon investors’ decisions and investment performance. The model is a simple optimal control framework that highlights the trade-off between financial returns and the satisfaction emanating from investing in firms or projects guided by ethical values and by good governance principles. Better financial outcomes may come with a social damage that the representative agent in the model will include, with a negative sign, in her utility function. Long-term steady-state results and transitional dynamics are duly evaluated for neoclassical and endogenous growth versions of the model.

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“…However, no agreement has been reached among researchers regarding the financial utility of such investments. Three alternative hypotheses relate to the relative returns of socially responsible portfolios and conventional portfolios [3,5,20,21]. According to the "doing good while doing well" perspective, a positive association between social and financial performance exists and superior returns from investing in high-rated stocks may be achieved.…”

Section: Hypothesis 3 (H3)mentioning

confidence: 99%

Does the Asset Allocation Policy Affect the Performance of Climate-Themed Funds? Empirical Evidence from the Scandinavian Mutual Funds Market

2020

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The aim of this paper is to evaluate the performance of climate-themed mutual funds, taking into consideration the structure of their asset allocation, especially their geographical focus of investment. Additionally, the influence of differences in the industry allocations on the funds’ investment results is evaluated. Our analyses are based on climate-friendly mutual funds registered in Scandinavian countries (i.e., Denmark, Norway, and Sweden) during 2010–2019. To classify the analyzed funds as climate-friendly, we use the relative carbon footprint measure, which is a novelty in studies on ESG funds (meeting the environmental, social, and corporate governance criteria). In our analyses, we use the absolute performance as well as the relative performance methods. The obtained results confirm that geographical and industrial asset allocations significantly affect the performance of Scandinavian climate-friendly funds. On the basis of our studies, we may state that analyzed mutual funds do not get abnormal returns, and their performance mostly depends on the market state. Additionally, the unconditional firm size factor did not influence the return of particular portfolios, while the conditional firm size factor was significant for European, global, and North American funds. Moreover, the firm value factor was significant. Finally, the momentum factor was only significant for the emerging markets portfolio when it reached positive values.

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The Performance of Socially Responsible Investments

Cited by 4 publications

References 62 publications

Divest or engage? Effective paths to net zero from the U.S. perspective

Divest or engage? Effective paths to net zero from the U.S. perspective

Optimal growth under socially responsible investment: a dynamic theoretical model of the trade-off between financial gains and emotional rewards

Does the Asset Allocation Policy Affect the Performance of Climate-Themed Funds? Empirical Evidence from the Scandinavian Mutual Funds Market

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