Formation of Sustainable Investment Attractiveness of Regions Under the Conditions of COVID-19

The decline in the forecast indicators of the economy and production activity, the structural transformation of international production and consumer preferences, the reduction in income from bonds and world tourism, the massive layoffs of workers that led to an increase in unemployment and a decrease in household income, deferred investments and the reorientation of investment flows, both in economic sectors and in the regional context, are all the result of the impact of another challenge called COVID-19. The COVID-19 pandemic has changed and continues to change many characteristics of the economy and society. Together with the onset of the Fourth Industrial Revolution and the transition to the digital era, as well as taking into account completely new realities of the development of future generations, which are regulated by the concept of sustainable development, the formation of investment attractiveness is also taking place in a fundamentally different way. In this regard, the article substantiates the need to introduce the category sustainable investment attractiveness into everyday use. The author’s vision of the interpretation of this concept is presented. A procedure for forming a stable investment attractiveness of regions in the conditions of COVID-19 has been developed.

Predicting Volatility Index According to Technical Index and Economic Indicators on the Basis of Deep Learning Algorithm

The Volatility Index (VIX) is a real-time index that has been used as the first measure to quantify market expectations for volatility, which affects the financial market as a main actor of the overall economy that is sensitive to the environmental and social aspects of investors and companies. The VIX is calculated using option prices for the S&P 500 Index (SPX) and is expressed as a percentage. Taking into account that VIX only shows the implicit volatility of the S&P 500 for the next 30 days, the authors develop a model for a near-optimal state trying to avoid uncertainty and insufficient accuracy. The researchers are trying to make a contribution to the theory of socially responsible portfolio management. The developed approach allows potential investments to make decisions regarding such important topics as ethical investing, performance analysis, as well as sustainable investment strategies. The approach of this research allows to use deep probabilistic convolutional neural networks based on conditional variance as a linear function of errors with the aim of estimating and predicting the VIX. For this purpose, the use of technical indicators and economic indexes such as Chicago Board Options Exchange (CBOE) VIX and S&P 500 is considered. The results of estimating and predicting the VIX with the proposed method indicate high precision and create a certainty in modeling to achieve the goals.

The Challenges of the VUCA World in the Development of Sustainable Investment Projects

The volatility, uncertainty, complexity and ambiguity (VUCA) of the business environment require that investment projects carried out within organizations also include sustainability aspects, in order to maintain a superior competitive position. Investors as well as other stakeholders from organizations are more inclined to companies that implement sustainable investment projects compared to traditional ones for which only profit and financial benefits matter. Thus, the purpose of this paper is to reveal how the rapid and often unfounded changes specific to today's world, the VUCA world influences the way that projects are carried out within organizations. Particular attention was also paid to the way in which organizations implement project-specific activities and sub-activities, in order to ensure sustainable development, even in a crisis situation. In order to achieve these objectives, a bibliometric and systematic analysis of the specialized literature was carried out, analyzing the present studies and articles from the area, that revealed the influence of the VUCA world on the business environment. Thus, this paper aims to present how the VUCA world affects organizations, the effects that complex and rapid organizational changes specific to the VUCA world have on the sustainability of investment projects, the impact of crises of the sustainable development on organizations, the implications of the VUCA world on strategies organizations. Following the analyzes carried out, the results showed that the elements specific to the VUCA world have a great influence on the sustainable development of organizations and, implicitly, on the projects carried out within it.

Environmental, social and governance and creditworthiness: Two contrary evidence from major Asian markets

Assets managed under sustainable investment criteria have been massively growing during the recent years. Among the criteria, environmental, social and governance (ESG) score leads the group as an important indicator of non-financial quality of a firm, which may reflect value to investors either through higher expected profit or lower risk. In this paper, we focus on the latter by exploring whether ESG score has linkage to the credit rating of firms due to the risk mitigation effect. Ordered logistic regressions are applied on a panel dataset of listed companies in Shanghai Stock Exchange and Tokyo Stock Exchange from 2009 to 2018. The results suggest that only in Japan, having ESG coverage is greatly associated with being awarded higher credit rating. However, only the environmental and governance pillars positively link to the Japanese firms’ credit ratings, while the social pillar shows negative correlation. The finding of heterogeneous effects translates to an important implication that investment in ESG should be taken with care as the impact of ESG may depend on different nature or culture of markets.

Green Bond: A Systematic Literature Review for Future Research Agendas

Green bonds (or climate bonds) are one of the most used sustainable investment instruments, and under the Paris Climate Agreement of 2015, the climate bond market is expected to thrive in the near future. Green bonds are gaining increasing popularity between environmentally responsible investors, as well as investors who “simply” attempt to benefit from portfolio diversification, including green issuances, that are close to other fixed bonds. This paper aims to take advantage of previous literature contributions on the green bond market to indicate the way forward for future research. Herein, through a systematic literature review on the green bond market, our ultimate goal is to provide investors, main markets actors, and policymakers with some helpful insight on the role of environmental investments in reshaping the financial markets and fostering the sustainability of the economy.

A Proposed Mechanism for Financial Reporting on Sustainable Investment and Its Role in Achieving Value Added - Applied in the Iraqi Midland Refineries Company-

The research aims to develop a proposed mechanism for financial reporting on sustainable investment that takes the specificity of these investments. To achieve this goal, the researcher used (what if scenario) where the future financial statements were prepared for the year 2026, after completion of the sustainable project and operation, as the project requires four years to be completed. The researcher relied on the results of the researchers collected from various modern sources relevant to the research topic and published on the internet, and the financial data and information obtained to assess the reality of the company's activity and its environmental, social, and economic impacts to formulate a proposed mechanism for accounting for Sustainable Investment. And the experimental approach was adopted to provide a proposed mechanism for financial reporting on sustainable investment per international accounting and reporting standards and then applied at the Iraqi Midland refineries company. There are three main findings from the research: the first finding shows the possibility of financing these projects, because this project may not generate significant economic returns (aims to achieve environmental and social returns as well), by configuring a sustainable reserve allocated to finance these projects. The second finding shows the possibility of presenting accounts for sustainable investment separately from traditional accounts (sustainability reserves, sustainable assets, sustainable revenues, sustainability expenses), as this classification can play an important role in the financial sustainability analysis. The third finding is the application of the proposed mechanism that contributes to increase the company's added value. The practical effects of the research are to encourage Iraqi companies (oil companies in particular) to invest in sustainable assets and develop a way to assess the sustainability of companies, because Iraq is one of the most Arab countries burning Gas flare. The researcher tried to highlight this project because it is the best example of sustainable investment that achieves economic returns (the sale value of recovered gases), social returns (protection of citizens living in the vicinity of the refinery) and environmental returns (reducing greenhouse gas emissions that contribute to global warming), where companies avoid investing in these assets because of their high cost and lack of expected financial return, and the relevant international organizations seek to promote this type of investment and develop appropriate tools, and this research comes in line with international trend. The concept of sustainable investment is a relatively recent one, where the originality of the current research shows in its attempt to present a proposed mechanism of financial reporting that supports this new type of investment due to the relative importance of this new type of investment

Sustainable Finance and COVID-19: The Reaction of ESG Funds to the 2020 Crisis

We investigated the financial performance of a sample of sustainable investment funds in terms of returns, volatility, and contagion risk during the financial crisis caused by the COVID-19 pandemic. In order to conduct a more reliable analysis, we considered a homogenous sample composed of 30 funds declaring the same benchmark (the MSCI Europe index). The Morningstar Sustainability ESG rating was used to determine the level of sustainability of each fund. Both the GARCH models and the event study suggest that funds with a higher ESG rating were able to outperform other funds during the COVID-19 period. These funds had a greater level of resilience and exhibited a lower level of risk contagion during the pandemic. These instruments appear to assume the role of risk protection and should be considered a means of both promoting sustainable growth and minimizing portfolio risk.

Bicycle Industry As a Post-pandemic Green Recovery Driver in an Emerging Economy: A SWOT Analysis

The COVID-19 pandemic has exposed socioeconomic vulnerabilities around the world. After fighting the coronavirus for more than one and a half years now, the countries are recovering from the epidemic with the help of cutting-edge medical research. The policymakers are implementing stimulus packages for post-pandemic economic recovery. However, sustainable ‘green recovery’ plans are yet to get adequate attention. Sustainable investment in green industries can create green jobs, promote a low-carbon economy, and foster long-lasting economic growth in the post-pandemic world. The COVID-19 affected countries with emerging economies call for even more focus on such investments. In Bangladesh, the bicycle industry - a growing low-carbon industry – has been showing promising potential for growth since the beginning of the pandemic. Both the local and global markets of Bangladeshi bicycles have seen substantial growth during the epidemic. In this paper, we analyze the potential of the Bangladeshi bicycle industry as an effective green recovery driver. We conduct semi-structured interviews with relevant experts and professionals, analyze their opinions, and perform a ‘strengths, weaknesses, opportunities, and threats (SWOT)’ analysis. The analysis reveals valuable insights regarding post-pandemic sustainable economic and environmental recovery which will be beneficial to the policymakers of Bangladesh and similar developing countries.

Banks and Climate-Related Information: The Case of Portugal

In 2014, a European Union (EU) Directive required certain large undertakings and groups to disclose non-financial information from 2017 onwards. In 2017, the EU guidelines on non-financial reporting established that reporting climate-related information is part of the non-financial information. Later, in 2019, the guidelines were reinforced to include a supplement that envisages improving climate-related information reporting. Banks can contribute to reducing climate-related risks by supporting investments in economic activities that aim to mitigate the risk of climate change. Capital needs should be reoriented towards sustainable investment. Banks shall manage financial risks arising from climate change; therefore, they must integrate climate change into their policies and procedures, assessing the potential impact of projects and financing on climate change. This study aimed to evaluate how banks in Portugal have been reporting climate-related information and whether the level of information has increased since 2017. Using content analysis, findings indicated that banks are already including climate-related information; however, they are still far from approaching what the new guidelines require. Results suggested that there is still a long way to go in this area concerning banks and regulators.