Sustainable Finance

2019 ◽  
Author(s):  
Matthew Archer
Keyword(s):  
Sustainable Development ◽  
Political Ecology ◽  
Financial Institutions ◽  
Natural Capital ◽  
Corporate Sustainability ◽  
Socially Responsible Investing ◽  
Socially Responsible ◽  
Impact Investing ◽  
Responsible Investing ◽  
Sustainable Finance

Sustainable finance refers to the integration of environmental, social, and governance (or ESG) considerations in processes of financial decision-making. It includes a number of strategies and financial instruments, such as green bonds, screening, impact investing, socially responsible investing, and so on. Over the past few decades, sustainable finance has evolved from a strategy employed by ethical investors (such as religious institutions) to screen “bad” companies (arms, alcohol, and tobacco manufacturers; casinos; etc.) from their portfolios to an increasingly central part of banks’ and other financial institutions’ risk management strategies. Over the next few years, scholars and practitioners expect sustainable finance to evolve even further, becoming a strategy for investors to actively pursue new opportunities that traditional financial analyses fail to reveal or accurately value. In that sense, sustainable finance has evolved alongside corporate sustainability, shifting from a values-based focus on social responsibility to a more explicitly financial focus on long-term, strategic growth. For the purposes of this essay, sustainable finance refers to a number of trends, including impact investing, socially responsible investing, financing for sustainable development, and so on. Early analyses of sustainable finance were focused on establishing correlation between the integration of social and environmental concerns in investment decisions and the performance of those investments. More recent analyses have started trying to understand the causal relationships between impacts and investments, and between social-environmental performance and financial performance. The role of financial institutions like mutual funds and insurance companies in mitigating climate change and promoting sustainable development has become an important topic for practitioners and policymakers, as well as for academics interested in sustainable development, corporate sustainability, and a range of other issues. However, sustainable finance has remained more or less marginal within mainstream academic finance, owing in part to the idea that it does not offer anything theoretically new to study. And yet, as a number of scholars have shown, sustainable finance offers a novel lens through which to study emergent forms of risk and their interaction with each other, as well as more classic theoretical problems such as governance, performativity, and valuation. Because this is an emerging and rapidly evolving field, many of the works cited are relatively recent. A growing contingent of critical scholars, especially in economic geography and political ecology, has also formed around the notion of natural capital and the valorization/financialization of nature it engenders.

Sustainable Development and the Financial System: Society's Perceptions About Socially Responsible Investing

2012 ◽  
Vol 22 (6) ◽  
pp. 410-428 ◽  
Author(s):  
Elena Escrig-Olmedo ◽  
María Jesús Muñoz-Torres ◽  
María Ángeles Fernández-Izquierdo
Keyword(s):  
Sustainable Development ◽  
Financial System ◽  
Socially Responsible Investing ◽  
Socially Responsible ◽  
Responsible Investing

Socially responsible investing: performance evaluation of BRICS nations

2020 ◽  
Vol 17 (4) ◽  
pp. 525-547
Author(s):  
Vanita Tripathi ◽  
Amanpreet Kaur
Keyword(s):  
Sustainable Development ◽  
Socially Responsible Investing ◽  
Socially Responsible ◽  
Content Type ◽  
Crisis Period ◽  
Responsible Investing ◽  
Brics Countries ◽  
Regulatory Bodies ◽  
The Impact ◽  
Asset Managers

PurposeThe study aims to contribute towards the sustainable development of financial systems, by testing the performance of socially responsible investing alternatives in emerging BRICS countries. The study outcomes give us an insight into viability of responsible financial decisions in contrast with the conventional style of investing.Design/methodology/approachThe authors examine the performance of socially responsible indices of BRICS nations vis-à-vis respective conventional market indices using various risk-adjusted measures and conditional volatility measures. We further segregate the 12-year study period to crisis and non-crisis period particular to the respective country, as well as a common global financial crisis period to analyze the impact of market conditions in BRICS nations and observe the performance using dummy regression analysis. Conditional volatility of the stochastic index series is measured using ARCH-GARCH analysis. Fama Decomposition Model helps rank the index performance through the sub-periods.FindingsFama Decomposition Model helps us observe that while Brazil secures a position in top rankers consistently, it is India that ranks top during crisis period. With evidence of outperformance in terms of risk-return by SRI indices of BRICS countries through the overall period as well as through different market conditions, our study contributes to the positive literature on socially responsible investing.Research limitations/implicationsThe study explores performance of SRI in BRICS and finds evidence of the sustainable investment to be non-penalizing to the investor, even as the performance trend remain distinct in the countries with same level of development. It has implications for the investors and asset managers to include responsible stocks, while for the companies and regulatory bodies to unite for better reporting and disclosures. Given the broad implications, future research is required to link the impact of various cultural, legislative and demographic factors on the level and performance of the socially responsible investment in BRICS nations.Practical implicationsThe current study evaluating and comparing performances of the socially responsible investments in BRICS nations puts forth following implications for the different sectors of the society, especially in emerging countries: (1) BRICS organization – The association of five economic giants, having significant influence over global as well as regional affairs, can aim to orient the countries' efforts towards collective sustainable development by designing uniform SRI framework. (2) Investors – In the globalization era, the investor can gain from ethical cross border investments to diversification and country benefits. (3) Companies and regulatory bodies – Only voluntary or mandatory unified efforts, to provide accurate and consistent disclosures, can upscale the mediocre growth trends of sustainable investing in emerging economies. (4) Asset Managers – Call of greater role in educating, warding off inhibitions related to RI.Originality/valueThis is to certify that the research paper submitted by us is an outcome of our independent and original work. We have duly acknowledged all the sources from which the ideas and extracts have been taken. The project is free from any plagiarism and has not been submitted elsewhere for publication.

scholarly journals Recent Innovations in Socially Responsible Investing (SRI): The Role of “Socially Responsible Bonds” in Spurring Sustainable Development

2018 ◽  
Vol 19 (1) ◽  
pp. 27-47
Author(s):  
Hannah Jun ◽  
Hyojin Kim ◽  
Songhee Han
Keyword(s):  
Sustainable Development ◽  
Social Impact ◽  
Potential Role ◽  
Social Issues ◽  
Socially Responsible Investing ◽  
Investment Strategies ◽  
Socially Responsible ◽  
Responsible Investing ◽  
Social Impact Bonds

While it has become clear that the global community needs to utilize partnerships between the public and private sectors to achieve broader economic and development goals, there has been less discussion about the potential role of investors in shaping and participating in this movement. Part of this may be due to familiarity with traditional methods such as official development assistance (ODA) and relatively less understanding about recent innovations in socially responsible investing (SRI), including social impact bonds and development impact bonds. As economies like Korea have begun to show greater interest in harnessing various investment strategies to achieve broader social goals, we find it critical to better understand what financial tools are available within the context of encouraging sustainable development. As such, this paper highlights the potential role investors can play in contributing to broader social issues both at home and abroad through an examination of recent innovations in SRI – specifically, the category of so-called “socially responsible bonds.”

Understanding Socially Responsible Investing and Its Implications for Islamic Investment Industry

2019 ◽  
Vol 7 (1) ◽  
pp. 1
Author(s):  
Mohd Nizam Barom
Keyword(s):  
Investment Decision ◽  
Socially Responsible Investing ◽  
Clear Understanding ◽  
Socially Responsible ◽  
Responsible Investment ◽  
Developed Economies ◽  
Responsible Investing ◽  
Screening Strategies ◽  
Investment Process ◽  
Islamic Investment

Understanding Socially Responsible Investing and Its Implications for Islamic Investment Industry // // // // // Social, ethical and environmental concerns have been used as important consideration for investment decision by an increasing number of investors. This can be seen by the size and growth of the socially responsible investment (SRI) industry in the developed economies. At the same time, scholars and commentators of Islamic finance have also called for Islamic investment industry to learn from the experience of SRI in incorporating social responsibility issues in the investment process, in line with the ethical principles of Islam and the overall objective of the Shari’ah (Maqasid al-Shari’ah). This would require Islamic investment sector to have a clear understanding of the SRI industry in order to effectively benefit from its experience. This is particularly critical due to the significant diversity of investors and complexity in the issues and strategies adopted in the SRI industry. Hence, this paper adds to the Islamic investment literature by providing an extensive  and systematic survey of SRI industry in terms of its (i) underlying motivations and values; (ii) issues of concerns; (iii) types of investors; and (iv) screening strategies. It then synthesizes these components within the context of the ‘value-based’ investors. This synthesized framework offers a useful tool for Islamic investment practitioners to understand the theoretical and practical aspects of SRI. Subsequently, the paper highlights important implications of the findings for Islamic investment industry in terms of the issues that it needs to consider in emulating SRI practices and a number of lessons that it can learn from the SRI experience.  

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