Environmentally friendly and socially responsible investment in and by occupational pension funds in the USA and in the EU

2021 ◽  
pp. 138826272110269
Author(s):  
Lauren Daniels ◽  
Yves Stevens ◽  
David Pratt
Keyword(s):  
Financial Performance ◽  
Investment Decision ◽  
Pension Funds ◽  
Socially Responsible Investment ◽  
Occupational Pension ◽  
Socially Responsible ◽  
Responsible Investment ◽  
Occupational Pensions ◽  
The Usa ◽  
The Eu

Worldwide pension funds, in their capacity as large institutional investors, are under increasing pressure to take social and environmental considerations into account in their investment decision-making process. The concepts Socially Responsible Investment (SRI) and Environmental Social Governance (ESG) are indeed ubiquitous in the current investment and pension community. This article aims to provide some insight into the conceptual relationship between SRI and ESG and its legal implications for the investment behaviour of private pension funds in the USA and the EU. Hence, the first part of the article gives some background to the distinct concepts of SRI and ESG. This leads to the finding that SRI goes one step further than ESG by prioritising moral or ethical considerations that may not be material to an investment’s financial performance, whereas ESG functions as a guideline to enhance financial performance. The second part analyses the legal possibilities and constraints for responsible investment in American occupational pensions and the third part does the same for European occupational pensions. The article concludes with a summary and comparative overview of the American and European lessons.

scholarly journals The Link Between SRI and Financial Performance: Effects and Moderators

2013 ◽  
Vol 17 (2) ◽  
pp. 105-122 ◽  
Author(s):  
Christophe Revelli ◽  
Jean-Laurent Viviani
Keyword(s):  
Financial Performance ◽  
Meta Analysis ◽  
Socially Responsible Investment ◽  
Empirical Literature ◽  
Empirical Methods ◽  
Socially Responsible ◽  
Responsible Investment ◽  
Counting Approach ◽  
Performance Effects ◽  
Vote Counting

Over the last twenty years, the debate on financial performance of socially responsible investment (SRI) has not yielded a clear consensus, arguing mainly that there was no difference in performance between SRI and ‘conventional’ investment, although SRI could underperform or outperform in some cases. Our research, based on a meta-analysis ‘vote-counting’ approach of the empirical literature, allows us to observe that the effects of SRI on financial performance are multiple. Second, we conclude that the financial performance of SRI is radically changing according to the empirical methods employed by researchers.

scholarly journals Efficiency of the Public Pensions Funds on the Socially Responsible Equities of Mexico

2018 ◽  
Vol 11 (1) ◽  
pp. 178
Author(s):  
Oscar De la Torre-Torres ◽  
Evaristo Galeana-Figueroa ◽  
José Álvarez-García
Keyword(s):  
Investment Strategy ◽  
Pension Funds ◽  
Socially Responsible Investment ◽  
Socially Responsible ◽  
Responsible Investment ◽  
Risk Indices ◽  
Investment Level ◽  
Significant Difference ◽  
Time Periods ◽  
Mean Variance

In the present work, we test the mean-variance efficiency that Mexican public pension funds would have shown had these invested their local equity portfolio component only in socially responsible stocks. With a daily simulation (from 1 January 2005 to 31 July 2018) of the Standard & Poors (S&P) Mexico target risk indices, we found that there was no significant difference between the more conservative pension funds that invested only in the Price Index and Quotations (IPC) sustainable index against the ones that invested in the conventional IPC. In the case of the more aggressive type of pension funds (those with a higher Mexican equity investment level), a lower mean-variance efficiency would have been observed had these invested in the IPC sustainable index. We also found, with a two-regime Markov-switching analysis, that socially responsible investment would have been better for most of these pension funds during distress time periods. Even if our results do not give strong short-term proof for the use of a socially responsible investment strategy in the most aggressive pension funds, we found that the benefits will be observed in the long-term, due to a better performance during distress time periods and the lag effect of mid and small-cap stocks in the performance.

scholarly journals Socially responsible investment: A view from the social rating agencies of Vigeo-Eiris and MSCI ESG STATS

2018 ◽  
Vol 4 (1) ◽  
pp. 27-40 ◽  
Author(s):  
J. A. González Bueno ◽  
J. Núñez Rodríguez
Keyword(s):  
Decision Making ◽  
Investment Decision ◽  
Socially Responsible Investment ◽  
Decision Making Process ◽  
Socially Responsible ◽  
Responsible Investment ◽  
Rating Agencies ◽  
Investment Decision Making ◽  
The Social ◽  
Social Rating

The concern of investors for environmental, social and corporate governance issues is giving rise to certain changes in the investment decision-making process. Given this situation, socially responsible investment has received the attention of practitioners and academics, and has reached a significant level of development in financial community in recent years. The main goal of this paper is to examine social rating methodologies developed by the two most renowned agencies worldwide: MSCI ESG STATS and Vigeo-Eiris.

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