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Article
Publication date: 2 March 2015

Laura de Zwaan, Mark Brimble and Jenny Stewart

Environmental, social and governance (ESG) risks have the potential to negatively impact financial returns, yet few superannuation funds integrate these considerations…

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Abstract

Purpose

Environmental, social and governance (ESG) risks have the potential to negatively impact financial returns, yet few superannuation funds integrate these considerations into their investment selection. The Cooper Review (2010) identified a lack of member demand as a key impediment to ESG investing by superannuation funds. Given this problem, the aim of this study is to explore superannuation fund members’ perceptions of ESG investing by their funds in order to identify reasons for the lack of demand.

Design/methodology/approach

An on-line survey was developed and distributed to assess possible reasons why members do not select ESG investment options. In total, 549 Australian superannuation fund members responded to the survey.

Findings

Results indicate that the majority of superannuation fund members are interested in ESG investing. Members lack awareness of their fund’s approach to ESG investing, and they do not perceive there to be a financial penalty from ESG investing. Finally, members show a preference for consideration of governance issues over both social and environmental issues.

Research limitations/implications

Respondents are well educated and the majority did not choose their superannuation fund. There was no measure of financial literacy included in the research instrument. There is also a general limitation in surveying superannuation fund members when they lack knowledge about superannuation.

Practical implications

The results indicate that superannuation members are interested in both superannuation and ESG investing. Given the low take-up of ESG investment options, this finding raises the question of how effectively funds are engaging their members.

Social implications

The results should be of interest to superannuation funds and may lead to renewed interest in promoting ESG products.

Originality/value

This is the first study to examine superannuation members’ attitudes and behaviours towards ESG investing in the context of superannuation. The study also adds to our understanding of member decision-making in the $1.8 trillion superannuation industry.

Details

Sustainability Accounting, Management and Policy Journal, vol. 6 no. 1
Type: Research Article
ISSN: 2040-8021

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Book part
Publication date: 2 September 2016

Christophe Revelli

The aim of this chapter is to propose a critical analysis of socially responsible investing (SRI) through debate and reconstruction. Our goal is therefore to try to…

Abstract

Purpose

The aim of this chapter is to propose a critical analysis of socially responsible investing (SRI) through debate and reconstruction. Our goal is therefore to try to understand how the definition of ethics in finance has steered SRI towards a financial approach where ethics is guided by finance.

Methodology/approach

This chapter proposes a two-point approach consisting of a meta-debate and development perspectives. Each approach is divided into three debates (ideological and philosophical, scientific and practical), which are interconnected.

Findings

The chapter concludes that the debate on mainstream SRI is necessary but should be re-discussed, as it is preventing in its current form the concept from developing and being grounded in real ethical values, sacrificing the individual ethics that should be driving investing decisions.

Originality/value

The chapter proposes to rethink the paradigm around SRI through a conceptual framework that re-inserts finance within ethics, where non-financial performance and impact investment should be at the centre of the scientific debates, leading to an SRI based on exclusion, the consideration of controversies and social impact measurement.

Details

Finance Reconsidered: New Perspectives for a Responsible and Sustainable Finance
Type: Book
ISBN: 978-1-78560-980-0

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Case study
Publication date: 12 December 2018

Stephanie Giamporcaro and David Leslie

To understand the motivations for adopting RI practices for institutional investors and asset managers; to understand the different RI strategies available to…

Abstract

Learning outcomes

To understand the motivations for adopting RI practices for institutional investors and asset managers; to understand the different RI strategies available to institutional investors; to understand the impediments to adoption of RI at an organisational level; to debate how financial institutions can drive the growth and adoption of RI among the investment community; and to illustrate the complexities of organisational change and the strategies that institutional entrepreneurs can use to overcome resistance to change from key stakeholders.

Case overview/synopsis:

The case is set in October 2017 against the backdrop of the pending unbundling of Old Mutual plc into four new independent businesses, and the subsequent relisting of Old Mutual Ltd on the Johannesburg Stock Exchange in South Africa. The head of responsible investment at Old Mutual Investment Group and the main protagonist of the case, Jon Duncan, is considering what the subsequent relisting will mean for the responsible investing programmes that he has set up over the past six years. The case goes on to describe how responsible investment principles were supported through the implementation of ESG integration and active ownership strategies. It also examines recent developments in ESG product innovations and demonstrates another technique available to responsible investment practitioners in the form of best-in-class ESG screening. The case ends with Duncan contemplating the strategic priorities of the RI team moving forward, and how the managed separation might impact on the RI agenda. It provides prompts for students to discuss and formulate a strategy for advancing the aims of responsible investing.

Complexity academic level

The case is aimed at postgraduate-level students enrolled in a management-related degree programme such as an MBA, and covers both sustainable and responsible finance and institutional entrepreneurship theory.

Supplementary materials

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

Subject code

CSS 1: Accounting and Finance

Details

Emerald Emerging Markets Case Studies, vol. 8 no. 4
Type: Case Study
ISSN: 2045-0621

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Article
Publication date: 24 August 2021

Erin Oldford, Neal Willcott and Tanner Kennie

The purpose of this paper is twofold. First, it endeavors to document the current state of environmental, social and governance (ESG) pedagogy within undergraduate finance…

Abstract

Purpose

The purpose of this paper is twofold. First, it endeavors to document the current state of environmental, social and governance (ESG) pedagogy within undergraduate finance courses of business schools, and second, it seeks to show how business schools can leverage student managed investment funds (SMIFs) to swiftly integrate ESG pedagogy.

Design/methodology/approach

The study is comprised of two sections that use different methodologies. The first part of the study involves a manual content analysis of undergraduate finance course textbooks, and related instructor materials are used to estimate the average coverage of ESG-related topics. Next, a case study of a SMIF that has recently integrated an ESG framework is provided to illustrate how this pedagogical innovation is effective in teaching ESG skills.

Findings

The findings of the content analysis of the three most commonly used textbooks in a sample of 17 Canadian universities, as well as associated instructor material, provide evidence that the primary emphasis in traditional curriculum remains on the shareholder, with little attention paid to ESG factors. The case study of an existing SMIF clearly demonstrates how a student-led development of an ESG framework provides the setting for effective, experiential learning.

Originality/value

This study shows that while traditional teaching settings, like lectures, may be slow to adapt to the rapidly changing needs of industry, nontraditional teaching venues, such as SMIFs, can be leveraged to meet industry demand for ESG skills, thereby closing the skills gap, enhancing student employability and increasing the relevance of business school education.

Details

Managerial Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 7 July 2014

Stephanie Giamporcaro and Suzette Viviers

The anti-apartheid movement represented a cornerstone for socially responsible investors in the 1970s and 1980s driven by the willingness to promote lasting social change…

Abstract

Purpose

The anti-apartheid movement represented a cornerstone for socially responsible investors in the 1970s and 1980s driven by the willingness to promote lasting social change. What happened next in terms of socially responsible investing (SRI) in the free South Africa? This chapter explores the local development of SRI in South Africa post-apartheid.

Design/methodology/approach

An in-depth literature review combined with a content analysis 73 SRI funds’ investment mandates were undertaken to investigate the local development of SRI in South Africa over the period 1992–2012.

Findings

Mechanisms of local divergence and global convergence have both shaped the phenomenon of SRI in South Africa. SRI in South Africa represents a melting-pot of societal values anchored in a local developmental and transformative political vision, some local and global Islamic religious values, and worldwide SRI and CSR homogenisation trends.

Originality/value

This chapter is the first attempt to outline the mechanisms of local divergence and global convergence that have moulded SRI in a democratic South Africa.

Details

Socially Responsible Investment in the 21st Century: Does it Make a Difference for Society?
Type: Book
ISBN: 978-1-78350-467-1

Keywords

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Book part
Publication date: 31 December 2013

Stephen Gates

Purpose – The purpose of this chapter is to explore the proactive role played by investor relations officers (IROs) in enhancing the quality and delivery of corporate…

Abstract

Purpose – The purpose of this chapter is to explore the proactive role played by investor relations officers (IROs) in enhancing the quality and delivery of corporate social performance (CSP) information to social responsibility investment (SRI) analysts and investors, thereby improving the link between CSP and corporate financial performance (CFP). The increasing pressures on corporations to produce and communicate CSP information will be described, as well as how the timely and meaningful communication of CSP can improve CFP.

Methodology/approach – Subsequent to a review of relevant literature, three case examples from McDonald’s, Nestlé, and Stora Enso illustrate Hockerts and Moir’s grounded theory framework that suggest how IROs can improve communication of CSP.

Findings – This chapter illustrates three levels of communicating CSP information. First, IROs target SRI investors and respond to ESG inquiries and surveys. At the second level, IROs integrate ESG information into business strategy and financial results. At the third level, IROs actively market CSP and create a two-way proactive dialogue between SRI investors and senior management and the board.

Practical implications – This chapter provides practical examples to improve ESG activities and their communication via the IRO to SRI analysts and investors.

Originality/value of chapter – This chapter contributes to the literature on the CSP–CFP link by illustrating how proactive IROs are improving the CSP information channel to SRI securities analysts and investors. Furthermore, it advances the theory and research concerning the impact of the information channel between IROs and securities analysts behind the CSP–CFP link.

Details

Institutional Investors’ Power to Change Corporate Behavior: International Perspectives
Type: Book
ISBN: 978-1-78190-771-9

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Article
Publication date: 13 January 2021

Salim Chouaibi, Jamel Chouaibi and Matteo Rossi

The purpose of this paper is to investigate the direct and indirect links between environmental, social and governance (ESG) practices and financial performance using the…

Abstract

Purpose

The purpose of this paper is to investigate the direct and indirect links between environmental, social and governance (ESG) practices and financial performance using the mediate role of green innovation.

Design/methodology/approach

To test the current study hypotheses, the authors applied linear regressions with a panel data using the Thomson Reuters ASSET4 and Bloomberg database from a sample of 115 UK and 90 Germany companies selected from the ESG index over the period 2005–2019.

Findings

The results show that the strengths ESG increase the firm value and the weaknesses decrease it. In addition, the authors find that green innovation fully mediates the relationship between ESG practices and financial performance in UK and Germany.

Practical implications

The findings provide interesting implications to academics practitioners and regulators who are interested in discovering ESG score, financial performance and green innovation. The results also provide insights to regulators and the board of directors on future growth opportunities for the company and the country.

Originality/value

This study is unique in examining the mediation effect of green innovation on the relationship between ESG practices and financial performance.

Details

EuroMed Journal of Business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1450-2194

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Article
Publication date: 22 October 2019

Lars Kaiser and Jan Welters

Existing empirical evidence on the impact of environmental, social and governance (ESG) integration on momentum portfolios is limited. The combination of the two is…

Abstract

Purpose

Existing empirical evidence on the impact of environmental, social and governance (ESG) integration on momentum portfolios is limited. The combination of the two is relevant given the risk-mitigating effect of ESG criteria, as well as the existence of momentum crashes. As such, ESG might lend itself to reduce crash risk for momentum investors.

Design/methodology/approach

In this paper, the authors provide insight into the impact of an ESG-constrained investment universe on momentum returns. The overall investment universe is split into high and low ESG-rated segments to anylse the characteristics of momentum portfolios conditional on the ESG rating.

Findings

The authors document the existence of a momentum premium across European stocks and for a subset of high and lows ESG-rated stocks. However, absolute returns of momentum strategies are significantly lower if momentum strategies are pursued on a subset of high ESG stocks. Additionally, findings document a risk-mitigation effect of ESG for momentum portfolios with significantly lower returns for momentum portfolios based on low ESG stocks during periods of momentum crashes.

Originality/value

Research on momentum investing and the momentum premium is large and well established, yet many questions remain. A recent study by Daniel and Moskowitz (2016) has analyzed crash risk for momentum investors and identified periods of strong momentum crashes. On the other hand, the literature on ESG integration in standing investment approaches is still limited, but as demand for sustainable products is increasing, so is the demand for a better understanding of the impact of ESG integration. Consequently, the authors provide evidence on the benefits of ESG integration for momentum investors to reduce their exposure to momentum crash risk.

Details

The Journal of Risk Finance, vol. 20 no. 5
Type: Research Article
ISSN: 1526-5943

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Book part
Publication date: 7 July 2014

Harry Hummels and Marieke de Leede

This chapter sketches a new development in responsible investing, namely impact investing. Impact investing, which we define as the entire spectrum of investments

Abstract

Purpose

This chapter sketches a new development in responsible investing, namely impact investing. Impact investing, which we define as the entire spectrum of investments deliberately aiming to create shared value, can be seen as an integrative approach to wealth creation through investments. The case of microfinance is used to illustrate this new development.

Methodology/approach

The chapter combines a viewpoint and a case study that serves to illustrate the practical relevance of the viewpoint.

Findings

The chapter starts with a brief overview of the origin and rise of responsible investments, followed by a description of mission-related investments and impact investing as its latest development. Microfinance is presented as a special case, thereby focusing on the investors, the asset allocation and the meaning – and application – of the notion of impact.

Practical implications

The chapter shows that a focus on social and financial returns can be combined without having to make serious financial sacrifices. It also demonstrates that investments can come from investors as diverse as pension funds, foundations or high net-worth individuals.

Social implications

If impact investing really takes off – particularly supported by institutional money – there will be much more opportunity to tackle social and environmental innovation than without those investments.

Originality/value of chapter

The chapter challenges (institutional) investors to evaluate their responsible investment strategy and to rethink their asset allocation. Impact investing can become an important addition to the responsible investment landscape.

Details

Socially Responsible Investment in the 21st Century: Does it Make a Difference for Society?
Type: Book
ISBN: 978-1-78350-467-1

Keywords

Content available
Article
Publication date: 5 January 2021

Mauro Sciarelli, Silvia Cosimato, Giovanni Landi and Francesca Iandolo

Recently, socially and responsible investments (SRI) have constantly grown becoming a highly discussed issue. Therefore, the main purpose of this paper is to better…

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4232

Abstract

Purpose

Recently, socially and responsible investments (SRI) have constantly grown becoming a highly discussed issue. Therefore, the main purpose of this paper is to better understand if environmental social governance (ESG) criteria integration in investment strategies can support the transition of finance toward a more sustainable growth.

Design/methodology/approach

An explorative analysis based on a multiple case study has been conducted and addressed by a content analysis on the Key Investors Information Documents (KIIDs) that the sample companies published for 2020.

Findings

The achieved results demonstrated that the case companies differently integrated ESG into their SRI; thus, if some of them are quite near to a full integration, the others demonstrated less than a full commitment with ESG. This seems to be mainly due to the different approach that asset management companies (AMCs) and/or managers have adopted for integrating ESG criteria.

Research limitations/implications

Even though the achieved results offered some interesting insights for asset managers, the explorative and qualitative nature of this study and the small sample investigated somewhat limits it.

Practical implications

AMCs, consultants and managers in developing and implementing their SRI strategy could be much more focused on the importance of ESG integration for the transition toward a more responsible and sustainable finance (micro-level) as well as a more sustainable development (macro-level).

Originality/value

The paper provides new insights into the essence of SRI strategies and their potential to contribute to sustainable development. Thus, it tries to shed new lights on the role that ESG can have to stimulate and support investment decisions and, in so doing, contributing to make finance grow more sustainable.

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