Sustainable Finance and Value Creation

Dear Colleagues,

Sustainable finance is increasingly on the agenda of policy setters, regulators, managers, and academics. This Special Issue focuses on value creation by three main actors: companies, regulators, and asset managers. Companies are incorporating ESG indicators in their strategic plans, while metrics for measuring ESG have been emerging (Diez-Cañamero et al., 2020). The literature is still scarce in terms of understanding what drives these initiatives by managers to incorporate ESG practices (Crespi and Migliavacca, 2020). The consequences for stakeholders also constitute a topic that calls for more research, in particular, whether an investment in ESG creates value for shareholders. Recent studies have mainly focused on the effects of ESG investment on performance, although many other finance-related topics may be analyzed through an ESG lens (Friede et al., 2015; Ellili, 2020; Del Giudice and Rigamonti, 2020; Matos et al., 2020). We welcome submissions focusing on the company level.

Regulators have also dedicated attention to ESG metrics. The Paris Agreement on climate change is one of many examples in this field. Following the agreement, green financing has gained relevance as a mechanism for companies to expand their sources of funding and to fund at a lower cost. Studies on green financing are welcome, regarding either its determinants or its consequences.

The number of investment funds with an environmental philosophy has also increased over the past few years. Research papers in this field have analyzed how such investments affect portfolios’ risk and return, and the rapid increase in the supply of ESG-related investments opens room for assessing whether these investments affect stock returns and create value for shareholders (Chen et al., 2017; La Torre et al., 2020). Fewer investment funds have a philosophy related to the other pillars of ESG, such as a social philosophy. We also invite contributions from authors interested in value creation from an asset management perspective.

Therefore, possible paper topics include but are not limited to:

• Determinants of a company’s investments in ESG
• Effects of ESG investment on a company’s performance and financing
• ESG and a company’s value creation
• Green financing and new (green) financial products
• Realization of ESG investment—investment funds
• Circular economy and finance
• New (sustainable) capitalism, sustainable finance, and economic growth
• Artificial intelligence, sustainable finance, and value
• Stakeholder value, shareholder value, and a company’s sustainable risk analysis

References

1. Chen, R. C. Y., Hung, S.-H., & Lee, C.-H. (2017). Does corporate value affect the relationship between Corporate Social Responsibility and stock returns? Journal of Sustainable Finance & Investment, 7 (2), 188–196.
2. Crespi, F. & Migliavacca, M. (2020). The Determinants of ESG Rating in the Financial Industry: The Same Old Story or a Different Tale? Sustainability, 12(16), 6398.
3. Del Giudice, A. & Rigamonti, S. (2020). Does Audit Improve the Quality of ESG Scores? Evidence from Corporate Misconduct. Sustainability, 12(14), 5670.
4. Diez-Cañamero, B., Bishara, T., Otegi-Olaso, J. R., Minguez, R., & Fernández, J. M. (2020). Measurement of Corporate Social Responsibility: A Review of Corporate Sustainability Indexes, Rankings and Ratings. Sustainability, 12(5), 2153.
5. Ellili, N. (2020). Environmental, Social, and Governance Disclosure, Ownership Structure and Cost of Capital: Evidence from the UAE. Sustainability, 12(18), 7706.
6. Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, 5 (4), 210–233.
7. La Torre, M., Mango, F., Cafaro, A., & Leo, S. (2020). Does the ESG Index Affect Stock Return? Evidence from the Eurostoxx50. Sustainability, 12(16), 1–12.
8. Matos, P. V., Barros, V., & Sarmento, J. M. (2020). Does ESG Affect the Stability of Dividend Policies? Sustainability, forthcoming.

Prof. Dr. Victor Barros
Prof. Dr. Joaquim Miranda Sarmento
Prof. Dr. Pedro Verga Matos
Guest Editors

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• ESG investment
• performance
• corporate finance
• green financing
• value creation
• sustainable finance
• triple bottom