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Sustainable Investment Issues: Financial Products, Performance and Methodologies
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Sustainable Investment Issues: Financial Products, Performance and Methodologies

A special issue of Sustainability (ISSN 2071-1050).

Deadline for manuscript submissions: closed (31 December 2020) | Viewed by 33256

Special Issue Editor

Dr. Fernando García

E-Mail Website
Guest Editor
Department of Economics and Social Sciences, Universitat Politècnica de València, 46022 València, Spain
Interests: sustainability; financial markets; investment strategies; ESG; asset valuation; socially responsible investment
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

In recent years, sustainability has become one of the main criteria for investors, together with return and risk. As a result, several approaches and financial products have been developed to help financial investors who are devoted to sustainable investment. Moreover, different issues have arisen, such as how to define sustainable corporations, whether they perform better than conventional ones, how to manage sustainable portfolios, how to deal with diversification restrictions, the credibility of ESG assessments, the reaction of investors after corporate scandals, etc.

This Special Issue will gather original research dealing with sustainable investment possibilities, products, approaches, and issues. Suitable topics include but are not limited to the definition of sustainable corporations and sustainable investment, sustainability reporting and information issues, sustainable stock indices, sustainable mutual funds, sustainability performance and financial performance in sustainable and conventional firms and investment products, multicriteria portfolio management, including sustainability criteria, sustainability and crowdfunding, microfinance and sustainability measurement, and ranking methodologies.

References:

Aouadi, A; Marsat, S. Do ESG Controversies Matter for Firm Value? Evidence from International Data. Journal of Business Ethics 2018, 151, 1027-1047.

Arribas, I.; Espinós-Vañó, M.D.; García, F.; Morales-Bañuelos, P.B. The Inclusion of Socially Irresponsible Companies in Sustainable Stock Indices. Sustainability 2019, 11, 2047.

Arribas, I.; Espinós-Vañó, M.D.; García, F.; Tamosiuniene, R. Negative Screening and Sustainable Portfolio Diversification. Entrepreneurship and Sustainability Issues 2019, 6 (4), 1566-1586.

Charlo, M.J.; Moya, I.; Muñoz, A.M. Financial Perfromance of Socially Responsible Firms: The short- and long- term Impact. Sustainability 2017, 9, 1622.

Drago, D.; Carnevale, C.; Gallo, R. Do corportae social responsibility ratings affecr credit default swap spreads? Corporate Social Responsibility and Environmental Management 2018, 1-9.

García, F.; González-Bueno, J.; Oliver, J.; Riley, N. Selecting Socially Responsible Portfolios: A Fuzzy Multicriteria Approach. Sustainability 2019, 11, 2496.

Manes-Rossi, F.; Tiron-Tudor, A.; Nicolò, G.; Zanellato, G. Ensuring more sustainable reporting in Europe using non-financial disclosure-de facto and de jure evidence. Sustainability, 2018, 10, 1162.

Singh, P.; Sethuramen, K.; Lam, J.Y. Impact of Corporate Social responsibility Dimensions on Firm Valu: Some Evidence from Hong Kong and China. Sustainability 2017, 9, 1532.

Taylor, J.; Vithayathil, J.; Yim, D. Are Corporate Social Responsibility /CSR) Initiatives such as Sustainable Development and Environmental Policies Value Enhancing or Window Dressing? Corporate Social Responsibility and Environmental Management 2017, 25, 971-980.

Utz, S. Corportae Scandals and the Reliability of ESG Assessments: Evidence from an international sample. Review of Managerial Science 2019, 13, 483-511.

Zhao, C.; Guo, Y.; Yuan, J.; Wu, M.; Li, D.; Zhou, Y.; Kng, J. ESG and Corportae Financial Perfromance: Empirical Evidence frm China’s Ñisted Power Generation companies. Sustainability 2018, 10, 2607.

Dr. Fernando García
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Sustainability is an international peer-reviewed open access semimonthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 2400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • sustainable investment products
  • corporate social responsibility
  • performance analysis
  • sustainable portfolio management
  • multicriteria investment decisions
  • social ratings
  • corporate reputation
  • social rating agencies

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Published Papers (6 papers)

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Research

22 pages, 394 KiB  
Article
Long-Term Sustainable Investment for Retirement
by Iqbal Owadally, Jean-René Mwizere, Neema Kalidas, Kalyanie Murugesu and Muhammad Kashif
Sustainability 2021, 13(9), 5000; https://doi.org/10.3390/su13095000 - 29 Apr 2021
Cited by 5 | Viewed by 5316
Abstract
We consider whether sustainable investment can deliver performance comparable to conventional investment in investors’ long-term retirement plans. On the capital markets, sustainable investment can be achieved through various instruments and strategies, one of them being investment in mutual funds that subscribe to ESG [...] Read more.
We consider whether sustainable investment can deliver performance comparable to conventional investment in investors’ long-term retirement plans. On the capital markets, sustainable investment can be achieved through various instruments and strategies, one of them being investment in mutual funds that subscribe to ESG (environmental, social, and governance) principles. First, we compare the investment performance of ESG funds with matched conventional funds over the period 1994–2020, in Europe and the U.S. We find no significant evidence of differing performance (at 5% level) despite using a number of investment performance metrics. Second, we perform a historical backtest to model a UK personal retirement plan from 2000 till 2020, taking full account of investment management fees and transaction costs. We find that investing in an index-tracker fund overlaid with ESG screening delivers a pension which is 10.4% larger than is achieved if the index-tracker fund is used without screening. This is also 20.2% larger than is achieved by investing in a collection of actively managed funds with a sustainable purpose. We conclude that an ESG-screened long-term passive investment approach for retirement plans is likely to be successful in satisfying the twin objectives of a secure retirement income and of sustainability. Full article
(This article belongs to the Special Issue Sustainable Investment Issues: Financial Products, Performance and Methodologies)
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17 pages, 663 KiB  
Article
Donor Reaction to Non-Financial Information Covering Social Projects in Nonprofits: A Spanish Case
by José Miguel Tirado-Beltrán, Iluminada Fuertes-Fuertes and J. David Cabedo
Sustainability 2020, 12(23), 10146; https://doi.org/10.3390/su122310146 - 4 Dec 2020
Cited by 8 | Viewed by 2675
Abstract
The notion of accountability in nonprofits suggests that these organisations should disclose financial and non-financial practices following a holistic model. In practice, the interest of both managers and researchers has focused primarily on donors and financial disclosures, for funding and methodological reasons respectively. [...] Read more.
The notion of accountability in nonprofits suggests that these organisations should disclose financial and non-financial practices following a holistic model. In practice, the interest of both managers and researchers has focused primarily on donors and financial disclosures, for funding and methodological reasons respectively. From the perspective of impact investment, all of them, government, beneficiaries, private donors, managers and volunteers are expected to make their decisions based on non-financial information as investors expecting social returns. However, to what extent does project information that demonstrates that the non-profit organisation has achieved its social mission actually matter? The main objective of this paper is to analyse whether the donations received by non-governmental organisations NGOs are related to the information disclosed on the projects undertaken. We perform our analysis separately for individual, private and public donors. Our results show that public donors are more interested in financial disclosures, private donors find information about outcomes and impacts to be most useful and individual donors do not tend to use non-financial information when it comes to making decisions about whether to donate or not. Full article
(This article belongs to the Special Issue Sustainable Investment Issues: Financial Products, Performance and Methodologies)
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12 pages, 2533 KiB  
Article
A Sustainable Quantitative Stock Selection Strategy Based on Dynamic Factor Adjustment
by Yi Fu, Shuai Cao and Tao Pang
Sustainability 2020, 12(10), 3978; https://doi.org/10.3390/su12103978 - 13 May 2020
Cited by 6 | Viewed by 4348
Abstract
In this paper, we consider a sustainable quantitative stock selection strategy using some machine learning techniques. In particular, we use a random forest model to dynamically select factors for the training set in each period to ensure that the factors that can be [...] Read more.
In this paper, we consider a sustainable quantitative stock selection strategy using some machine learning techniques. In particular, we use a random forest model to dynamically select factors for the training set in each period to ensure that the factors that can be selected in each period are the optimal factors in the current period. At the same time, the classification probability prediction (CPP) of stock returns is performed. Historical back-testing using Chinese stock market data shows that the proposed CPP quantitative stock selection strategy performs better than the traditional machine learning stock selection methods, and it can outperform the market index over the same period in most back-testing periods. Moreover, this strategy is sustainable in all market conditions, such as a bull market, a bear market, or a volatile market. Full article
(This article belongs to the Special Issue Sustainable Investment Issues: Financial Products, Performance and Methodologies)
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18 pages, 617 KiB  
Article
Forecasting the Environmental, Social, and Governance Rating of Firms by Using Corporate Financial Performance Variables: A Rough Set Approach
by Fernando García, Jairo González-Bueno, Francisco Guijarro and Javier Oliver
Sustainability 2020, 12(8), 3324; https://doi.org/10.3390/su12083324 - 20 Apr 2020
Cited by 43 | Viewed by 6433
Abstract
The environmental, social, and governance (ESG) rating of firms is a useful tool for stakeholders and investment decision-makers. This paper develops a rough set model to relate ESG scores to popular corporate financial performance measures. This methodology permits handling with information in an [...] Read more.
The environmental, social, and governance (ESG) rating of firms is a useful tool for stakeholders and investment decision-makers. This paper develops a rough set model to relate ESG scores to popular corporate financial performance measures. This methodology permits handling with information in an uncertain, ambiguous, and imperfect context. A large database was gathered, including ESG scores, as well as industry sector and financial variables for publicly traded European companies during the period 2013–2018. We carried out 500 simulations of the rough set model for different values in the discretization parameter and different grouping scenarios of firms regarding ESG scores. The results suggest that the variables considered are useful in the prediction of ESG rank when firms are clustered in three or four equally balanced groups. However, the prediction power vanishes when a larger number of groups is computed. This would suggest that industry sector and financial variables serve to find big differences across firms regarding ESG, but the significance of the model drops when small differences in ESG performance are scrutinized. Full article
(This article belongs to the Special Issue Sustainable Investment Issues: Financial Products, Performance and Methodologies)
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13 pages, 781 KiB  
Article
Analyzing Profitability and Discount Rates for Solar PV Plants. A Spanish Case
by Inmaculada Guaita-Pradas and Ana Blasco-Ruiz
Sustainability 2020, 12(8), 3157; https://doi.org/10.3390/su12083157 - 14 Apr 2020
Cited by 21 | Viewed by 7865
Abstract
The widespread use of renewable energy sources and the growing concern about climate change, together with Spain’s exceptional weather and solar radiation conditions, have led to an increase in the use of photovoltaics for energy production in the country. Solar power generation has [...] Read more.
The widespread use of renewable energy sources and the growing concern about climate change, together with Spain’s exceptional weather and solar radiation conditions, have led to an increase in the use of photovoltaics for energy production in the country. Solar power generation has been tightly regulated, although the legal framework has changed frequently over the years. When assessing the potential financial performance of any business venture, legal as well as financial aspects must be considered, but a critical factor is the discount rate used, which must reflect the company’s capital cost. Other factors are the period of interest, the firm’s activity, market risk, and the level of debt of firms in the sector. The main objective of this study is thus to estimate the discount rate for companies using photovoltaics to produce solar power. We calculate it by employing two financial techniques: capital asset pricing model and historical return analysis. We then evaluate the investment in a photovoltaic plant with a capacity of 5000 kW located in eastern Spain, assuming it started its activity in different years which coincide with changes in the regulatory framework. The results show the relevance of the initial outlay costs for the profitability of photovoltaic power plants. Full article
(This article belongs to the Special Issue Sustainable Investment Issues: Financial Products, Performance and Methodologies)
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13 pages, 620 KiB  
Article
Liquidity Risk and Investors’ Mood: Linking the Financial Market Liquidity to Sentiment Analysis through Twitter in the S&P500 Index
by Francisco Guijarro, Ismael Moya-Clemente and Jawad Saleemi
Sustainability 2019, 11(24), 7048; https://doi.org/10.3390/su11247048 - 10 Dec 2019
Cited by 27 | Viewed by 5491
Abstract
Microblogging services can enrich the information investors use to make financial decisions on the stock markets. As liquidity has immediate consequences for a trader’s movements, this risk is an attractive area of interest for both academics and those who participate in the financial [...] Read more.
Microblogging services can enrich the information investors use to make financial decisions on the stock markets. As liquidity has immediate consequences for a trader’s movements, this risk is an attractive area of interest for both academics and those who participate in the financial markets. This paper focuses on market liquidity and studies the impact on liquidity and trading costs of the popular Twitter microblogging service. Sentiment analysis extracted from Twitter and different popular liquidity measures were gathered to analyze the relationship between liquidity and investors’ opinions. The results, based on the analysis of the S&P 500 Index, found that the investors’ mood had little influence on the spread of the index. Full article
(This article belongs to the Special Issue Sustainable Investment Issues: Financial Products, Performance and Methodologies)
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