Editorial

6 pages, 217 KiB

Open AccessEditorial

Sustainable Finance and the 2030 Agenda: Investing to Transform the World

by María Mar Miralles-Quirós and José Luis Miralles-Quirós

Sustainability 2021, 13(19), 10505; https://doi.org/10.3390/su131910505 - 22 Sep 2021

Cited by 9 | Viewed by 3629

On 25 September 2015, the member states of the United Nations approved an initiative in New York called “Transforming our world: the 2030 Agenda for Sustainable Development” [...] Full article

(This article belongs to the Special Issue Sustainable Finance and the 2030 Agenda: Investing to Transform the World)

Research

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14 pages, 281 KiB

Open AccessArticle

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

by Beatrice Boumda, Darren Duxbury, Cristina Ortiz and Luis Vicente

Sustainability 2021, 13(15), 8142; https://doi.org/10.3390/su13158142 - 21 Jul 2021

Cited by 2 | Viewed by 2429

Abstract

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 [...] Read more.

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. Full article

(This article belongs to the Special Issue Sustainable Finance and the 2030 Agenda: Investing to Transform the World)

30 pages, 1747 KiB

Open AccessArticle

Circular Economy and Value Creation: Sustainable Finance with a Real Options Approach

by Amalia Rodrigo-González, Alfredo Grau-Grau and Inmaculada Bel-Oms

Sustainability 2021, 13(14), 7973; https://doi.org/10.3390/su13147973 - 16 Jul 2021

Cited by 10 | Viewed by 3486

Abstract

This paper presents a methodological proposal that integrates the circular economy concept and financial valuation through real options analysis. The Value Hill model of a circular economy provides a representation of the course followed by the value of an asset. Specifically, after the [...] Read more.

This paper presents a methodological proposal that integrates the circular economy concept and financial valuation through real options analysis. The Value Hill model of a circular economy provides a representation of the course followed by the value of an asset. Specifically, after the primary use, the life of an asset may be extended by going through four phases: the 4R phases (Reuse, Refurbish, Remanufacture and Recycle). Financial valuation allows us to quantify value creation from firms’ asset circularity under uncertainty, modelled by binomial trees. Furthermore, the 4R phases are valued as real options by applying no-arbitrage opportunity arguments. The major contribution of this paper is to provide a quantitative approach to the value of circularity in a general context that is adaptable to firms’ specific situations. This approach is also useful for translating relevant information for stakeholders and policy makers into something with economic and financial value. Full article

(This article belongs to the Special Issue Sustainable Finance and the 2030 Agenda: Investing to Transform the World)

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40 pages, 1789 KiB

Open AccessArticle

Social Impact of Value-Based Banking: Best Practises and a Continuity Framework

by Adriana Kocornik-Mina, Ramon Bastida-Vialcanet and Marcos Eguiguren Huerta

Sustainability 2021, 13(14), 7681; https://doi.org/10.3390/su13147681 - 09 Jul 2021

Cited by 7 | Viewed by 7886

Abstract

How do financial institutions enable social impact? We examined this question in the context of values-based financial institutions, which are amongst the most experienced institutions around the world in addressing the very real banking needs of enterprises and individuals within their communities. There [...] Read more.

How do financial institutions enable social impact? We examined this question in the context of values-based financial institutions, which are amongst the most experienced institutions around the world in addressing the very real banking needs of enterprises and individuals within their communities. There is, indeed, an urgency today to have the banking industry consider its social impact in a holistic way. This paper expands our understanding of how these financial institutions, all members of the Global Alliance for Banking on Values, define, design, implement, monitor and scale-up social impact. We used a multiple-case studies design to investigate their approach and inductive analysis to derive a model. From a theoretical perspective, we found that a social impact virtuous circular model best reflects how values-based financial institutions approach and practise social impact. Each step of the circular model clearly shows the way in which these institutions address and achieve social impact. Our findings have important implications for academic research focussed on understanding how finance can generate social impact. The findings of this article can, especially, also have practical implications for all types of financial institutions willing to improve the way in which they address social challenges and, ultimately, increase their social impact. At a time when more resources are needed to meet the Sustainable Development Goals, this is urgent. Full article

(This article belongs to the Special Issue Sustainable Finance and the 2030 Agenda: Investing to Transform the World)

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11 pages, 521 KiB

Open AccessArticle

The Convergence between Sustainability and Conventional Stock Indices. Are We on the Right Track?

by Pablo Vilas, Laura Andreu and José Luis Sarto

Sustainability 2021, 13(14), 7613; https://doi.org/10.3390/su13147613 - 07 Jul 2021

Cited by 4 | Viewed by 2388

Abstract

The growth of passive and socially responsible (SR) investment makes that sustainability indices play an important role in defining what constitutes a sustainable investment. In order to know the suitability of sustainability indices as benchmarks for SR investors, we used different linear regressions [...] Read more.

The growth of passive and socially responsible (SR) investment makes that sustainability indices play an important role in defining what constitutes a sustainable investment. In order to know the suitability of sustainability indices as benchmarks for SR investors, we used different linear regressions to compare the compositions of sustainability indices and their conventional counterparts and to compare the levels of corporate social responsibility (CSR) of both types of indices. We showed that the composition of sustainability indices gradually converged towards their conventional peers. Moreover, the difference between the CSR levels of both type of indices remained the same or even decreased over time. We concluded that a change in the weighting method of sustainability indices such as the equally weighted criterion would significantly increase the difference from their conventional counterparts. However, due to the relationship between CSR and size, this change would penalize the CSR level of the index. These results raise the question of whether SR passive investors will be able to meet their non-financial expectations as a consequence of the convergence. Full article

(This article belongs to the Special Issue Sustainable Finance and the 2030 Agenda: Investing to Transform the World)

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28 pages, 2922 KiB

Open AccessArticle

Reducing Socioeconomic Inequalities in the European Union in the Context of the 2030 Agenda for Sustainable Development

by Agata Szymańska

Sustainability 2021, 13(13), 7409; https://doi.org/10.3390/su13137409 - 02 Jul 2021

Cited by 17 | Viewed by 3335

Abstract

The paper analyzes selected indicators monitoring the socioeconomic conditions of the European Union with regard to reducing inequalities. The main attention is paid to the 2030 Agenda and its Sustainable Development Goal 10, which calls for reducing inequalities within and among countries. The [...] Read more.

The paper analyzes selected indicators monitoring the socioeconomic conditions of the European Union with regard to reducing inequalities. The main attention is paid to the 2030 Agenda and its Sustainable Development Goal 10, which calls for reducing inequalities within and among countries. The empirical part of the study is based on two separate studies and the data source is Eurostat. The first study focuses on the dynamics of the SDG10 indicators for the EU27. Due to the limited availability of all SDG10 indicators, the timeframe of this study covers the years 2010–2019. As a result, the SDG10 indicators for the EU27 as a whole are analyzed over that period or via a comparison of disparities between the two extreme dates, i.e., between 2010 and 2019. The second study focuses on the analysis of (dis)similarities of 27 individual European Union member states with respect to a set of variables capturing the socioeconomic conditions of these countries. The method used is cluster analysis, supported by the linear ordering method and principal component analysis. Due to the limited availability of indicators measuring the progress towards SDG10, especially those related to the evaluation of a citizenship gap, the second research does not use all indicators directly assigned to SDG10 (because most of them are not available for all countries), but rather employs a set of additional variables that may potentially affect the levels and dynamics of inequalities among and within countries. The general conclusion of the study is that the analysis of SDG10 indicators over the medium term (i.e., over the period 2010–2019) implies that the EU27 was able to make progress in reducing inequalities among countries; however, the income inequalities within countries persist or have even deepened. The insights from multivariate statistical methods emphasize the existing disparities between a group of countries, including Spain, Bulgaria, and Romania, and the rest of the EU countries in both analyzed years (i.e., in 2010 and 2019), regardless of the set of variables applied in analyses. Moreover, the results highlight the persistence in disparities between “old” and “new” member states and suggest the disparity between the “peripheral” and the rest of the “old” EU countries. Furthermore, the role of expenditure on social protection in affecting income disparities is emphasized, as is the impact of demographic factors in emphasizing the differences in socioeconomic situations across EU member states. Full article

(This article belongs to the Special Issue Sustainable Finance and the 2030 Agenda: Investing to Transform the World)

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17 pages, 935 KiB

Open AccessArticle

Sustainability in the Aerospace Sector, a Transition to Clean Energy: The E²-EVM Valuation Model

by Salvador Cruz Rambaud, Joaquín López Pascual and Juan Carlos Meléndez Rodríguez

Sustainability 2021, 13(12), 6717; https://doi.org/10.3390/su13126717 - 13 Jun 2021

Cited by 3 | Viewed by 3734

Abstract

Civil aviation is one of biggest industrial contributors to CO₂ emissions worldwide. One of the most urgent problems of this sector is providing new technologies to continue operating in a more sustainable environment through a transition to clean energy. The Earned Value [...] Read more.

Civil aviation is one of biggest industrial contributors to CO₂ emissions worldwide. One of the most urgent problems of this sector is providing new technologies to continue operating in a more sustainable environment through a transition to clean energy. The Earned Value Management (EVM) model, as a traditional project management tool, is continuously being revised with new releases and extensions (e.g., ESM, EDM, QEVM, E-EVM, and ZEVM), but to date none of them has applied an expert judgment criterion to be able to modify and anticipate the final result of the project. In such a way, this paper introduces a novel approach to the topic with the so-called Enhanced and Efficient Earned Value Management (denoted E²-EVM) model by including this new capability through the real options methodology, thus helping to support the sustainability of the aerospace sector. This research focuses on three main goals: the description of recent green initiatives in the aerospace sector by checking its contribution to reaching the well-known Sustainable Development Goals (SDGs), the development of a new version of the EVM model by applying the real options methodology, and, finally, the financial contribution to the aerospace industry by applying these initiatives and methodologies. Full article

(This article belongs to the Special Issue Sustainable Finance and the 2030 Agenda: Investing to Transform the World)

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20 pages, 327 KiB

Open AccessArticle

Natural Disasters and Economic Growth: The Mitigating Role of Microfinance Institutions

by John Sseruyange and Jeroen Klomp

Sustainability 2021, 13(9), 5055; https://doi.org/10.3390/su13095055 - 30 Apr 2021

Cited by 3 | Viewed by 2241

Abstract

In this study, we explore whether microfinance institutions (MFIs) can mitigate the adverse macroeconomic consequences of natural disasters. The provision of capital immediately following a natural event is recognized as one of the necessary conditions for a fast economic recovery. However, one concern [...] Read more.

In this study, we explore whether microfinance institutions (MFIs) can mitigate the adverse macroeconomic consequences of natural disasters. The provision of capital immediately following a natural event is recognized as one of the necessary conditions for a fast economic recovery. However, one concern is that a large majority of natural disasters occur in developing countries where households and the private sector have only limited access to the formal banking system. As an alternative, MFIs may fill up this gap in providing liquidity in the form of microcredit. The existing evidence on how MFIs respond to disaster effects is foremost based on case and micro-level evidence. In turn, the focus of this study is more on the macro impact of MFI activities after a natural disaster. Based on the finding obtained from an OLS-FE model using an unbalanced panel considering more than 80 developing countries and emerging economies, we can conclude that natural disasters harm macroeconomic performance primarily through their effect on the agricultural sector. However, access to lending facilities from MFIs mitigates a large part of this negative effect. Moreover, the extent to which MFIs are able to mitigate these effects depends to a great extent on their nature, i.e., their organizational structure, profitability, legal status, age, and the number of clients they serve. Full article

(This article belongs to the Special Issue Sustainable Finance and the 2030 Agenda: Investing to Transform the World)

14 pages, 1648 KiB

Open AccessArticle

Shades between Black and Green Investment: Balance or Imbalance?

by Vítor Manuel de Sousa Gabriel, María Mar Miralles-Quirós and José Luis Miralles-Quirós

Sustainability 2021, 13(9), 5024; https://doi.org/10.3390/su13095024 - 29 Apr 2021

Cited by 2 | Viewed by 1519

Abstract

This paper analyses the links established between environmental indices and the oil price adopting a double perspective, long-term and short-term relationships. For that purpose, we employ the Bounds Test and bivariate conditional heteroscedasticity models. In the long run, the pattern of behaviour of [...] Read more.

This paper analyses the links established between environmental indices and the oil price adopting a double perspective, long-term and short-term relationships. For that purpose, we employ the Bounds Test and bivariate conditional heteroscedasticity models. In the long run, the pattern of behaviour of environmental indices clearly differed from that of the oil prices, and it was not possible to identify cointegrating vectors. In the short-term, it was possible to conclude that, in contemporaneous terms, the variables studied tended to follow similar paths. When the lag of the oil price variable was considered, the impacts produced on the stock market sectors were partially of a negative nature, which allows us to suppose that this variable plays the role of a risk factor for environmental investment. Full article

(This article belongs to the Special Issue Sustainable Finance and the 2030 Agenda: Investing to Transform the World)

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