Search results

This study aims to provide a precise understanding of how corporate sustainability information is used in socially responsible investing (SRI). The study is motivated by the lack of a recognised body of knowledge on this issue. This study, therefore, collates and reviews relevant studies (67 studies) to provide guidance to investors interested in SRI and identify a research agenda for academics desiring to contribute to this area.

This study conducts a systemic literature review employing recognised key words and searching the Web of Science. HistCite is utilised to ensure important cited studies are not missed from the collection. The review was conducted from two perspectives: (1) sources of sustainability information and (2) how the information is used in SRI.

The review identifies five major sources of sustainability information, including corporate reports, ESG ratings, industry affiliation, news and private communication with firms. These sources of information play different roles in the cross section of SRI strategies (i.e. negative and positive screening, active ownership and integration). This study provides guidance on how to use this information in SRI and provides recommendations for future research on how analysts interact with the information, how different informational characteristics impact implementation, ways to improve data quality, improvements to analysis methods and where data use needs to be extended into new strategies.

This review contributes to the SRI literature by inventorying studies of an important, yet omitted aspect, namely, sustainability information. This work also enriches the literature on corporate sustainability information by investigating how this information can be used for a specific purpose, namely, SRI. Given the increasing interest in SRI, this review will provide much-needed guidance for a range of practitioners, including investors and regulators.

This study aims to examine the impact of environmental, social and governance (ESG) practices on the financial performance of Malaysian Shariah-compliant companies over the period 2010–2017.

Panel regression models are used for this study to test the effect of ESG practices on the performance and the interaction variables to examine the impact of double ESG – Shariah screening on firms’ performance.

This study finds a positive relationship between ESG practices and financial performance, suggesting that ESG practices can enhance firm value. Additionally, the authors also find evidence that double ESG–Shariah screening can enhance the ESG relationship with performance. These results are consistent and robust to three proxies for financial performance and different estimation techniques.

The positive relationship between ESG practices and performance implies that firms should improve their ESG commitment as this is consistent with enhancing performance.

This study presents evidence concerning the impact of ESG practices on the financial performance of Shariah companies, thereby paving the way for further studies in sustainability investments in Shariah companies.

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.

This study aims to investigate the relationship between stock markets, environmental, social and governance (ESG) factors and Shariah-compliant in an integrated framework.

The authors employ the multivariate factor stochastic volatility (mvFSV) framework to extract the volatility of the different sectoral indices. Based on this evidence, the authors employ the quantile vector autoregressive (QVAR) approach to examine the dynamic spillover connectedness among the aforementioned indices.

The study emphasizes the following major findings: (1) significant time-varying spillover connectedness across quantiles, (2) bidirectional and asymmetric spillover effect among the ESG index and the other sectoral indices, (3) the strength of spillover connectedness is time-varying across quantiles, (4) based on the perspective of portfolio optimization, ESG market is a significant strong forecasting contributor to conventional and Shariah-compliant markets, (5) overall, the findings point out serious quantile pass-through effect among ESG index and the other sectoral indices during the COVID-19 health crisis.

This study extends the previous literature in the following ways. First, to the best of the researchers’ knowledge, none of the existing studies have investigated the relationship between stock markets, ESG factors and Shariah-compliant in an integrated framework. Second, this study extends the previous scholarships by applying the mvFSV. Third, the authors propose a new rolling version to estimate dynamic spillovers, namely the rolling-window quantile VAR method. This approach provides a great advantage in computing the dynamics of return and variance spillover between variables in terms not only of the overall factor but also of the net (pairwise) aspect.

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.

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.

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.

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.

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.

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.

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.

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.

The purpose of this paper is to address the corporate governance implications of the US terror‐free investment screens, instituted both legislatively and voluntarily, on the operations of non‐US multinational corporations (MNCs) concerning international trade and foreign direct investment with nations designated as “State Sponsors of Terrorism.”

After a brief introduction to the issue of “terror‐free lists” and investment indexes and divestment screens, the paper summarizes the US Federal and State Laws pertaining to state sponsors of terrorism and their direct impact on international trade and investment transactions. The third section evaluates the success of environmental, social, and governance (ESG) indexes and investment screens compared to standard market investment indexes. The fourth section discusses the potential effects of terror‐free stock indexes and divestment (“social”) screens on corporate governance of non‐US corporations. In the final section, the paper offers business policy recommendations concerning international trade and foreign direct investment decisions and the listing of equity stock on the US financial market exchanges, and offer scholarly research questions addressing this issue.

Non‐US MNC managers should recognize, first, the importance of global corporate citizenship and reputation; second, the expansion of terror‐free investing criterion in ESG investment indexes and divestment screens; and third, the growth in the number of state government prohibitions on investing funds with foreign MNCs complicit with terror‐sponsoring states.

Exploratory in nature, this seminal paper evaluates an issue of emerging importance to non‐US MNC managers and directors concerned with potential political and economic repercussions of their international trade and foreign direct investment decisions.

The purpose of this paper is to trace the evolution of the Archway Investment Fund (AIF) at Bryant University from its founding in 2005 as a portfolio focused exclusively on US equities to a multi-asset program that incorporates US equities, non-US equities, equity ETFs, REITs, individual bonds, fixed income ETFs and options. It also describes the explicit introduction of environmental, social and governance (ESG) considerations into the investment process.

The paper follows a case study approach.

The paper describes the programmatic changes that accompanied this evolution in these areas: finance department curriculum innovations; the investment guidelines and constraints that govern the AIF; the investment process utilized; the oversight and governance process; and the reporting, presentation, and publicity initiatives that keep critical constituencies (university administration, faculty, alumni and students) informed and engaged in this program to sustain its success.

The vast majority of student-managed funds are equity funds focused on individual stock selection. The AIF is a multi-asset fund with separate equity and fixed income sub-portfolios that explicitly incorporates ESG factors into the security selection process.

The field of socially responsible investment (SRI) has become a central theme in the mutual funds industry. The risk implications associated with this investment approach are less explored. This study further investigates the real contribution to the investor offered by the SRI alternative.The aim of this paper is to throw more light on this debate.

Analyzing a large sample of US companies, this study investigates the tendency to generate risk when the portfolio is built, taking into account SRI. The research is based on the backtest of the real performance obtainable by adopting different investment strategies in which the red line is the selection method based on the principles of corporate social responsibility.

The investor must pay a cost that depends on the degree of rigor in the selection criteria. The risk associated with SRI is influenced by the measure adopted. SRI has a better asymmetric risk behavior than other securities. The results suggest using different selection models according to the investor’s objectives. When the objective is to maximize the average return and the remuneration risk, the SRI selection model should be negative or at least as inclusive as possible. In the event that the investor’s objective is to contain risk indices, a restrictive approach to the selection of investments is advisable.

Academic research has long been investigating the ability to generate profits but often neglects the levels of risk implicit in such investment approaches. The originality of this research consists in the adoption of a model based on the continuous optimization of the portfolio. This approach allows the results to be assessed by the returns actually obtained.

The purpose of this study is to explore the necessity for developing Islamic sustainable and responsible investment (i-SRI) criteria based on environmental, social and governance issues.

To address the above objective, this study adopted a qualitative method via content document analysis and interviews with experts.

Based on the analysis, this study discovered five primary aspects that lead to the necessity for developing i-SRI criteria. First, Malaysia has yet to develop i-SRI criteria. Second, the absence of i-SRI criteria will eventually lead to Shariah issues. Third, any Islamic financial instrument is bound to encounter numerous issues and challenges, thereby making it difficult to be marketed globally if it does not have a proper and standardized framework. Fourth, the establishment of i-SRI criteria can serve as a key reference point for the players in the industry, including investors, policymakers and other parties. Finally, the development of i-SRI criteria can play a vital role in enhancing the current Islamic capital market products offering in Malaysia.

There are several implications identified in this study. First, continuous research on the i-SRI criteria can offer numerous benefits to the regulatory bodies and policymakers who can use the findings in their decision-making process. Second, in terms of investors, the results can help them to make better investment choices by referring to the i-SRI criteria. Third, this study will be valuable to the academicians in terms of opportunity to explore a new research area, i.e. the i-SRI criteria, besides adding to the extant literature on this topic which is still scant currently.

This study discovered five primary aspects that lead to the necessity for developing i-SRI criteria.