Responsible Investing With Venture Capital

More often than not, responsible investing (RI) is associated with “patient” capital and sustainable development. Venture capital (VC), by its objectives to invest in projects with very high returns and exit quickly the market, is rightly considered as “impatient” capital, and as such, it is a less likely candidate to contribute to sustainability. This chapter advances the argument that VC can indeed contribute to sustainability, should it adopt the ESG factors into its investment criteria. This is illustrated using the case study of a Canadian VC firm, the Cycle Capital Management (CCM). The latter uses strict ESG criteria and rigorous decision-making mechanisms in the screening, evaluation, and the choice of highly lucrative and innovative projects with the aim to contribute to the Canadian economy's sustainability through its efforts to reduce the environmental footprint of its investments. Policy makers and regulators should develop policies that promote the growth and development of venture capital, should they care about sustainability and value creation.

The Reasoning of a Responsible Investment Position in the Structure of the Stock Exchange Market

Purpose: To substantiate the place and role of the responsible investment in the structure of the stock exchange market. Methods: Structure-functional in order to form an idea of the structure of the stock exchange market, determining the place and role of responsible investment elements in the stock market organization; systematic analysis to identify current trends and patterns in the functioning of the socially responsible investment segment by geographical regions of the world; statistical and graphical methods for quantitative and visual presentation of the results of the stock market sectors analysis, represented by responsible investment elements. Findings: The definition of «responsible investment» and «stock market» has been clarified; a number of subjects, objects and forms of responsible investment, which are elements of the stock market, are singled out and substantiated; the generalization of activities of stock exchanges in the field of responsible investing is carried out; the dynamics of stock market sector indicators, which are represented by elements of responsible investment, are analyzed; key reporting standards used by stock exchanges in disclosing ESG issues are analyzed. Theoretical Implications: A comprehensive assessment of the functioning of socially responsible investment segment as part of the stock market is carried out, the place and role of responsible investing in the stock market structure are substantiated, which creates a basis for the development of effective measures to increase the stock market efficiency of Ukraine and its transformation into an effective and stable source of investment resources. Future Research: The results can be used in the context of further study of the stock market transformation in Ukraine on the basis of a socially responsible trajectory and fractal analysis. Paper Type: Theoretical. The study was performed within the state budget research «Fractal model of the stock market transformation in Ukraine: socially responsible investment to achieve the Sustainable Development Goals» № 0121U100473.

Wealthy Private Investors and Socially Responsible Investing: The Influence of Reference Groups

Sustainable development requires a shift from traditionally invested assets to socially responsible investing (SRI), bringing together financial profits and social welfare. Private high-net-worth individuals (HNWIs) are critical for this shift as they control nearly half of global wealth. While we know little about HNWIs’ investment behavior, reference group theory suggests that their SRI engagement is influenced by their identification with and comparison to reference groups. We thus ask: how do reference groups influence the investment behavior of SRI-oriented HNWIs? To answer this question, we analyzed a unique qualitative data set of 55 semi-structured interviews with SRI-oriented HNWIs and industry experts. Our qualitative research found that, on the one hand, the family serves as a normative reference group that upholds the economic profit motive and directly shapes HNWIs to make financial gains from their investments at the expense of social welfare. On the other hand, fellow SRI-oriented HNWIs serve as a comparative reference group that does not impose any concrete requirements on social welfare performance, indirectly influencing SRI-oriented HNWIs to subordinate social concerns to financial profits. Our scholarly insights contribute to the SRI literature, reference group theory, and practice.

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

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.

A Sustainable environmental change and ESG initiatives by the manufacturing and others service Industries during COVID19 Pandemic

Covid-19 has improved the economy’s ESG plan. The ESG rating of an industry is crucial for stakeholders and will influence future business practices. ESG is commonly understood to refer to a set of criteria for making long-term investments in the areas of the environment, social welfare, and governance. Climate change is a systemic concern, and governments, companies, and society are increasingly determined to meet it. Climate change, according to the ESG, is the world’s most complicated challenge, posing collective risk and ambiguity to society. The impact of ESG elements and climate risk in the insurance business is investigated in this research. The research will also look into how insurers are responding to climate change. The research will also look into how insurers are pursuing climate-friendly activities such as creating green jobs, supporting socially responsible investing, and prioritizing environmental, social, and governance (ESG) and commercial sustainability in their operations. As a result, the study’s major recommendation is that potential clients and insurers increase their horizons of ESG risk awareness.

Household Preferences for Investing in Crowdfunding

Using representative survey data on the Dutch population, we analyze households’ actual participation and stated preferences for crowdfunding involvement at the extensive and intensive margin, with emphasis on the relation with investing in socially responsible assets. We find that crowdfunding investors are higher educated and more future oriented than others, whereas risk aversion plays a negative but insignificant role. Financial literacy is positively associated with knowing about crowdfunding, but not with actual participation. A stated choice preference experiment largely confirms these relations. At the intensive margin, however, results are rather different: Women have a stronger preference for crowdfunding than men do. Financial literacy reduces the preferred share invested in crowdfunding. We find a strong positive relation between crowdfunding and socially responsible investing. We identify several common factors: a desire to contribute to improving society and a lack of confidence in traditional financial institutions. Comparing stated and revealed preferences, we find that the potential for attracting more crowdfunding funders is much smaller than for attracting socially responsible investors.