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.

Socially Responsible Investment Portfolio Construction with a Double-Screening Mechanism considering Machine Learning Prediction

Although socially responsible investment (SRI) has developed into an important investment style, only a small number of studies discuss SRI portfolio construction. In view of the overwhelming breakthrough of machine learning in prediction, this paper proposes SRI portfolio construction models by combining a double-screening mechanism considering machine learning prediction and an extended global minimum variance (GMV) model (or extended maximum Sharpe ratio (MSPR) model), which are, respectively, named double-screening socially responsible investment (DSSRI) portfolio models I and II. The proposed models consist of two stages, i.e., stock screening and asset allocation. First, this paper develops a novel double-screening mechanism incorporating environmental, social, and corporate governance (ESG) and return potential criteria to ensure that high-quality stocks with good ESG performance and high-return potential are input into the optimal portfolio. Specifically, to obtain accurate stock return predictions, an extreme learning machine model optimized by the genetic algorithm is employed to predict stock prices. Next, to trade off the financial and ESG objectives of SRI investors, an extended GMV model (or extended MSPR model) considering the ESG factor is introduced to determine the capital allocation proportion of the stocks. We take the A-share market of China as the sample to verify the effectiveness of the proposed models. The empirical results demonstrate that compared with alternative models, the proposed models can yield better annualized return and ESG score performance as well as competitive Sharpe ratio performance.

Developing the socially responsible investment practice in the context of national economic security

Subject. The article addresses the issue of sustainable and socially responsible investment in the context of economic security. Objectives. The aim is to prove a hypothesis that the development of the practice of socially responsible investment can be considered as one of factors in strengthening the economic security of the State. Methods. We employ general scientific research methods. Results. We analyze the main indicators of the development of the socially responsible investment market in the world and in Russia, systematize key participants of the market, their functions and role in ensuring the economic security of the State and company. We offer a number of areas for the development of socially responsible investment, which will contribute to strengthening the economic security, including raising awareness of the financial community about sustainable financing and formation of new behavioral patterns of investment portfolios; incorporating ESG instruments in the monetary policy of the Bank of Russia; developing incentive mechanisms for companies that actively use ESG principles in their business models, formulating international initiatives and standards for ESG financing in the EAEU. Conclusions. In the current financial market conditions and active transformation of business models, the influence of ESG factors will increase. It will stimulate the development of the market for socially responsible investment and contribute to economic security strengthening. The proposed measures can be integrated into the process of formulating a long-term strategy of socio-economic development of the Russian Federation.

Do Socially Responsible Investment Funds Sell Losses and Ride Gains? The Disposition Effect in SRI Funds

An increasing percentage of the total net assets under professional management is devoted to ethical investments. Socially responsible investment (SRI) funds have a dual objective: building an investment strategy based on environmental, social, and corporate governance (ESG) screens and providing financial returns to investors. In the current study, we investigate whether this dual objective has an influence on the behavior of mutual fund managers in the realization of gains and losses. Evidence has shown that most investors in SRI funds invest in those funds primarily because of their social concerns. If the motivations of SRI managers align with those of SRI investors, SRI managers might then have more incentives than conventional managers to hold onto losing stocks if they feel their social value compensates for the economic loss. We hypothesize that SRI managers would be less prone to the disposition effect than conventional managers. Pertaining to the disposition effect, we do not find evidence of a difference in the behavior of SRI fund managers compared with that of conventional fund managers. Our results hold, even when considering market trends, management structure, gender, and prior performance.

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

Sustainable Finance as a Contested Concept: Tracing the Evolution of Five Frames Between 1998 and 2018

Sustainable finance has received increasing attention over the last years. Nonetheless, the meaning of the term remains ambiguous. This article approaches this ambiguity by understanding sustainable finance as a contested concept, whose meaning has been subject to varying interpretations by different actors. To map these interpretations, the article offers an inductive analysis of the network of actors that concern themselves with sustainable finance. Inside of this network actors offer competing interpretations of sustainable finance which can be conceptualised as frames. Using network analysis and interviews I identify five frames that are present in three periods between 1998 and 2018. Distinct communities advance a Socially Responsible Investment frame, a risks and opportunities frame, a climate finance frame, a critical frame and an integrated frame that tries to bring the different actors together. Describing the emergence of these frames, their position in the network and their relations to each other can add to our understanding of sustainable finance as it complements existing authoritative classifications and histories of the topic.

Pengaruh Socially Responsible Investment Terhadap Kinerja Keuangan Pada Perusahaan Manufaktur Sektor Industri Barang Konsumsi Yang Terdaftar Di BEI Periode 2014-2018

The aims of this research is to examine the effect of Socially Responsible Investment (SRI) towards the financial performance of the company. The population in this research are manufacturing company sector consumer goods industry listed on the Indonesia Stock Exchange (IDX) period 2014-2018, totaling 49 companies. Sampling using purposive sampling method, and obtained 170 data from 34 companies in each period. This research used Structural Equation Modeling-Partial Least Square (SEM-PLS) to analyze data. The results of research showed that Socially Responsible Investment (SRI) have a positive significant impact on the financial performance used firm size as control variabel. Financial perfomance in this researchs measured by Return on Asset (ROA), Return on Equity (ROE) dan Net Profit Margin (NPM). Socially Responsible Investment (SRI) measured by JSE Limited SRI Index 2019 and firm size measured by total assets, total sales and total employees.

SOCIALLY RESPONSIBLE INVESTMENT (SRI) ATTITUDE OF MUTUAL FUND INVESTORS IN KARNATAKA

Primary objective of the paper – The research intends to analyze the influence of various demographic and other factors on the attitude of selected mutual fund investors towards socially responsible investment avenues. Methodology adopted -A well-structured questionnaire was used as a tool for the purpose of collecting the data required for the research. The sample size of 100 mutual fund investors is selected from Davanagere and Chitradurga districts of Karnataka state. The respondents are selected on random basis from the target population and also the area. The descriptive research design is adopted in this research. Major findings of the paper- Majority of the respondents are male and also falling in the age group of 51 – 60 years. It is found from the research that the age of the respondents has the considerable association with the factors considered for the investment decision. But the gender, educational qualification and the monthly income of the mutual fund investors has no relationship with the criteria for their investment decision.