Sustainability and Finance: Environment, Social, and Governance (ESG)

Finance plays a central function in the business world. From being included in small and specialized funds, Environment, Social, and Governance (ESG) and socially responsible investment (SRI) have become part of the mainstream for investors and analysts. In this chapter, I will address what ESG, SRI, environmental and social risk assessment, and ethical investment are about, as well as different investment strategies taking these into account. Further, dilemmas that arise are introduced such as what is a sustainable sector or product and how this differs based on the values of individuals. The move from addressing sustainability issues as a risk reduction activity to a business opportunity is discussed. Finally, the Norwegian Pension Fund, the world’s largest fund, is used as an example to illustrate product-based and conduct-based exclusions in practice.

The influence of contagious disease threat on general risk-taking tendency

We conducted two studies to investigate the effects of the threat of a contagious disease on people's tendency to engage in risk-taking behaviors that are not directly related to the disease, such as investment decisions. In Study 1 we demonstrated that individual differences in germ aversion influenced risk-taking tendency. Participants with relatively high germ aversion were less likely than were those with relatively low germ aversion to engage in risk-taking behaviors encompassing the ethical, investment, gambling, recreational, health, and social domains. In Study 2 we replicated the results of Study 1 in a different setting and examined the underlying process by which perceived disease threat inhibits risk taking. The findings suggest that the threat of disease-induced negative affect decreased risk-taking tendencies. This implies that precautionary behavior activated by disease-threat salience can extend beyond the health domain to a broader range of situations.

Sama czeluść

The text discusses an interview conducted by Wiktor Krajewski with Alina Dąbrowska, one of the last living witnesses of history, a prisoner of five concentration camps, forced to participate in two Death Marches. While discussing her most difficult experiences during the Second World War, Dąbrowska attempts to assess the human relations. By divulging and explaining what influenced her life choices, how she perceives the infernal life of concentration camp and how she sees herself, she reveals her ethical investment in narrating her own life story.

Crowdfunding

Crowdfunding is a new form of both investment opportunities and source of raising capital. The aim of this chapter is to explore the understanding of the newly invented crowdfunding, types of the existing platforms of the industry. Authors investigated crowdfunding platforms that are registered in securities commission Malaysia and Kapitalboost platform of Singapore and their mode of investment. Authors also looked in depth and reviewed a current literature on crowdfunding. An investment model of crowdfunding that will be suitable for the Muslim investors who are looking into an ethical investment that will contribute to the wellbeing of the societies as whole through Mudharabah and Musharakah investment. The findings explored that equity crowdfunding could bring more benefit and less harm to entrepreneurs. Consequently, there are two types of models that are based on equity-in and equity-out; hence, the chapter recommends the equity crowdfunding over the debt-based through Islamic investment method of Musharakah and Mudharabah investment.

Comparison of Stock Performance Based on Ethical Investment: Evidance on JII and SRI-KEHATI Indices

This research aims to analyze and compare the performance of the Islamic stock portfolio represented by the JII index and ethical investment represented by the SRI-KE-HATI index by measuring the Risk Adjustment Return Index through the Sharpe index, Treynor index, and Jensen Index differential return and appraisal ratio. The data analysis of this research consists of five parts, namely descriptive analysis, analysis of stock performance, with three methods, namely Sharpe, Treynor, and Jensen.differential return and appraisal ratio and Multiple Comparison Test. Based on the comparison of the performance of JII and SRI-KEHATI stocks in 2014-2019, it can be concluded that the overall method of Sharpe, Treynor and differential return shows a negative performance value, which means that the performance is not good, whereas when measured using the Jensen method and Appraisal Return shows positive performance value, which means good performance. When compared between the performance of JII and SRI-KEHATI shares, there is a difference between the performance of the JII and SRI-KEHATI Indices during the study period

The Risk and Performance of Ethically Compliant Investment

This paper presents a discussion of prior literature on the risk and performance of ethically compliant equity. This review of literature provides an organised evaluation of the available studies in ethical investment. In particular, this paper presents surveys of literature concerning shariah-compliant equity and socially responsible investments. The discussion of the literature synthesises the information in the respective studies into a summary. Each subsection provides an analysis of the information gathered by first providing an overview of the current empirical studies and, second, identifying gaps and showing the limitation of theoretical views in the existing studies. Discussion in previous literature emphases only one type of ethical investment, however, this paper, on the other hand, covers both the religious and social perspectives of ethics, which provide a more comprehensive view of ethics. The paper finds out that studies on the risk and performance of ethically compliant investment report mixed results. This is due to the disparities in the research methodological approach. However, it is almost unanimous that ethical funds demonstrate higher stability (lower risk) during the financial crisis and tend to outperform the conventional funds during this state of financial uncertainty. Future studies can conduct more firm-level analysis and integrates both screening criteria (shariah and socially responsible screening) to reconcile the results.

12. Trustee investment

Trustees must invest in a manner that is prudent and fair, and failure to do so may make them personally liable to compensate for any loss. However, it is difficult to prove a breach of trust, and to prove and quantify the loss suffered by the fund. Even if the trustees admit that they invested imprudently and that the trust fund suffered a loss, there seems to be no effective remedy for improper trustee investment. This chapter deals with trustee investment and shows that the modern trend in trustee investment is towards liberalization, freedom of choice, and the free participation of trust funds in investment markets. After discussing the nature of trustee investment, it considers the goals of trustee investment and the trustees’ investment powers. The chapter also analyses types of investment, the trustees’ investment duties, liability for improper investment by trustees, and ethical investment.