Approaches to shaping portfolio strategies based on the socially responsible investing concept

2021 ◽  
Vol 14 (4) ◽  
pp. 376-392
Author(s):  
Natal'ya A. KHUTOROVA ◽  
Nikita A. NAZIN
Keyword(s):  
Financial Markets ◽  
Graphical Analysis ◽  
Socially Responsible Investing ◽  
Socially Responsible ◽  
The Sustainable Development ◽  
Analysis Techniques ◽  
Responsible Investing ◽  
Portfolio Strategies ◽  
General Scientific ◽  
Russian Stock Market

Subject. The article considers formulation of portfolio strategies that rest on the concept of socially responsible investing. Objectives. The purpose of this study is to analyze approaches to shaping the portfolio strategies based on the principle of socially responsible investing in the Russian stock market. Methods. The study employs general scientific research methods; logical, comparative, and statistical analyses; graphical analysis techniques. Results. We formulated and tested two strategies of socially responsible investing, i.e. Short ESG Ranking of Russian Companies and Long ESG Ranking of Russian Companies. The testing demonstrated below market return for the entire period. Thus, the strategies cannot be considered effective. To increase profitability, we proposed to optimize the strategies by including ESG-related debt instruments. Green bonds enabled to significantly increase profitability and outstrip OFZ yields. Despite the fact that according to the testing, the effect of both strategies turned out to be worse than IMOEX and MOEXBC indices, the strategies can be considered as relevant and acceptable for portfolio simulation. Conclusions. Under the current conditions in the financial markets caused by serious shocks during the coronavirus pandemic and significant changes in the monetary policy of the Bank of Russia, the proposed strategies can be used by socially responsible institutional investors to shape investment policy and by individuals to manage funds in individual investment accounts. New bonds of Russian issuers in the sustainable development sector of the Moscow Exchange expanded the list of ESG instruments. They can serve as an effective optimization tool.

The Market for Socially Responsible Investments

2020 ◽  
pp. 171-188
Author(s):  
Mark Anthony Camilleri
Keyword(s):  
Financial Markets ◽  
Positive Impact ◽  
Socially Responsible Investing ◽  
Future Research ◽  
Socially Responsible ◽  
Responsible Investing ◽  
Socially Responsible Investments ◽  
The Subject ◽  
Public Organisations ◽  
Sustainable Investments

This chapter explains how socially responsible investing (SRI) has evolved in the last few decades and sheds light on its latest developments. It describes different forms of SRI in the financial markets and deliberates on the rationale for the utilisation of positive and negative screenings of listed businesses and public organisations. It also presents key theoretical underpinnings on the subject and reports that the market for the responsible investments has recently led to an increase in contractors, non-governmental organisations (NGOs), and research firms who are involved in the scrutinisation of the enterprises' environmental, social, and governance (ESG) credentials. This contribution raises awareness on the screenings of positive impact and sustainable investments. It puts forward future research avenues in this promising field of study.

The market for socially responsible investing: a review of the developments

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mark Anthony Camilleri
Keyword(s):  
Financial Markets ◽  
Financial Services ◽  
Positive Impact ◽  
Socially Responsible Investing ◽  
Future Research ◽  
Socially Responsible ◽  
Content Type ◽  
Responsible Investing ◽  
Non Governmental Organizations ◽  
Sustainable Investments

Purpose This study aims to explain how socially responsible investing (SRI) has evolved in the past few decades and sheds light on its latest developments. It describes different forms of SRI in the financial markets, and deliberates on the rationale for the utilization of positive and negative screenings of listed businesses and public organizations. Design/methodology/approach A comprehensive literature review suggests that the providers of financial capital are increasingly allocating funds toward positive impact and sustainable investments. Therefore, this descriptive paper provides a factual summary of the proliferation of SRI products in financial markets. Afterwards, it presents the opportunities and challenges facing the stakeholders of SRI. Findings This research presents a historic overview on the growth of SRI products in the financial services industry. It clarifies that the market for responsible investing has recently led to an increase in a number of stakeholders, including contractors, non-governmental organizations and research firms who are involved in the scrutinization of the businesses’ environmental, social and governance (ESG) behaviors. Originality/value This discursive contribution raises awareness on the screenings of positive impact and sustainable investments. The researcher contends that today’s socially responsible investors are increasingly analyzing the businesses’ non-financial performance, including their ESG credentials. In conclusion, this paper puts forward future research avenues in this promising field of study.

scholarly journals Socially responsible investing: from the ethical origins to the sustainable development framework of the European Union

2021 ◽  
Author(s):  
Alice Martini
Keyword(s):  
European Union ◽  
Socially Responsible Investing ◽  
Quality Data ◽  
Special Focus ◽  
The European Union ◽  
Socially Responsible ◽  
The Sustainable Development ◽  
Responsible Investing ◽  
Development Framework ◽  
Critical Issues

AbstractIn this work, we present an overview of the historical development of socially responsible investing (SRI). We will argue that such a financial activity has been boosting in recent decades from a niche, mainly as a religious-led exclusionary practice, towards a mainstream strategy of risk analysis for institutional and retail investors. We also discuss the advances and possible drawbacks that regulatory activity and harmonization process on such industry have achieved at international level in recent years, with a special focus on the European Union. The study shows that the lack of a globally accepted taxonomy on what constitutes sustainable activities, of regulatory clarity and of high-quality data allowing for comparisons across industries and regions, together with practical and behavioural complexities are major critical issues that discourage SRI industry at the global level.

Socially Responsible Investing for Sustainability: Overcoming Its Incomplete and Conflicting Rationales

2013 ◽  
Vol 2 (2) ◽  
pp. 311-338 ◽  
Author(s):  
Benjamin J. Richardson
Keyword(s):  
Financial Markets ◽  
Environmental Sustainability ◽  
Global Financial Crisis ◽  
Socially Responsible Investing ◽  
Ecological Impacts ◽  
Socially Responsible ◽  
Temporal Perspective ◽  
Environmentally Sustainable ◽  
Responsible Investing ◽  
The Global Financial Crisis

AbstractIn the wake of the Global Financial Crisis and worsening collateral social and environmental problems, socially responsible investing (SRI) has garnered more interest internationally as a potential civilizing influence on the financial economy. In particular, SRI is increasingly conceptualized as a means to promote environmentally sustainable development by disciplining financial markets to be more attentive to their ecological impacts. In this sense, SRI emerges as a putative form of transnational governance that utilizes non-state actors and mechanisms to promote sustainability in an economic sector that traditionally has had little accountability for its environmental performance. But as a largely voluntary movement, with rudimentary legal support, SRI so far has wielded limited clout.A hindrance to the aspirations of SRI is deficiencies in its rationales. This article critiques the main theories advanced to justify SRI from the perspective of their contribution to promoting environmental sustainability: the complicity-based doctrine, leverage-based responsibility, and the universal owner thesis. Apart from gaps or limitations shown in each rationale, the article demonstrates that they conflict with the existing parameters of fiduciary law responsibility of financial institutions. An alternative rationale that emphasizes the temporal perspective to invest over the long term is suggested as a better approach for SRI if it is to be relevant to the pressing challenges of promoting sustainability and governing global financial markets.

Sovereign Wealth Funds and Socially Responsible Investing: An Emerging Public Fiduciary

2012 ◽  
Vol 1 (2) ◽  
pp. 125-162 ◽  
Author(s):  
Benjamin J. Richardson
Keyword(s):  
Financial Markets ◽  
Environmental Sustainability ◽  
Global Economy ◽  
Global Financial Crisis ◽  
Socially Responsible Investing ◽  
Socially Responsible ◽  
Sovereign Wealth Funds ◽  
Responsible Investing ◽  
Significant Phenomenon ◽  
The Global Financial Crisis

The dramatic growth of sovereign wealth funds (SWFs) in recent decades has made them a significant phenomenon in global financial markets and raised the prospect of more enlightened investing that respects the environmental underpinnings of economic prosperity. Until the Global Financial Crisis of 2008, the movement for socially responsible investing (SRI) had been the only noteworthy dissenting voice to the traditional complacency about the financial economy’s wider impacts. That financial calamity not only unveiled a systemic malaise in the financial alchemy of the global economy but also highlighted its social and environmental sequelae. The rise of SWFs, several of which are legally mandated to practice SRI, gives hope that states may reclaim some public oversight over finance capitalism. The purpose of this article is to investigate the governance of some SWFs with a view to assessing their capacity to contribute to environmental sustainability. As public financial institutions empowered by a broader conception of investment that takes account of social and environmental factors, SWFs have the incipient markings of ‘public fiduciaries’. SWFs could provide a novel way to interpolate the public trust environmental responsibilities of the state into the governance of the financial economy. This article focuses on the French and Norwegian SWFs, which arguably have the most comprehensive SRI practices of all SWFs. Both, however, have struggled to reconcile their ethical and financial mandates into a coherent investment philosophy. But their putative fiduciary responsibilities to society through an increasingly long-term investing perspective suggest a new normative direction to reconcile these tensions and to thereby help institutionalize the principles of intergenerational equity and sustainable development in the context of financial markets.

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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