Exploring the Impact of Environmental, Social, and Governance Ratings in Investment Decisions During Uncertain Times: A Focus on the Energy Industry
Keywords:
ESG, Financial Crisis, Investment Decision, Energy Sector, Portfolio Risk
Abstract
With sustainability awareness on the rise around the world, and as global awareness of sustainability grows, it's inevitable that the financial sector will have to adapt. More than just a numbers-based assessment, modern finance is faced with the integration of environmental, social and governance (ESG) standards. Our research explores how these ESG standards influence investment decisions, especially in uncertain contexts such as global conflicts or pandemics. The growing importance of these considerations is underlined by regulatory developments, which underscore the need for investors, particularly institutional and corporate investors, to factor ESG criteria into their decision-making processes.
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References
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16. Pedersen, L. H., Fitzgibbons, S., & Pomorski, L. (2021). Responsible investing: The ESG-efficient frontier. Journal of Financial Economics, 142(2), 572-597. https://doi.org/10.1016/j.jfineco.2020.11.001
17. Riedl, A., & Smeets, P. (2017). Why do investors hold socially responsible mutual funds? The Journal of Finance (New York), 72(6), 2505-2550. https://doi.org/10.1111/jofi.12547
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2. Broadstock, D. C., Chan, K., Cheng, L. T. W., & Wang, X. (2021). The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China. Finance Research Letters, 38, 101716. https://doi.org/10.1016/j.frl.2020.101716
3. Caflisch, R. E. (1998). Monte Carlo and quasi-Monte Carlo methods. Acta Numerica, 7, 1-49. https://doi.org/10.1017/S0962492900002804
4. Cao, J., Titman, S., Zhan, X., & Zhang, W. (2020). ESG preference, institutional trading, and stock return patterns (No. w28156). National Bureau of Economic Research.
5. Chatterji, A., & Levine, D. (2006). Breaking down the wall of codes: Evaluating non-financial performance measurement. California Management Review, 48(2), 29-51.
6. Díaz, V., Ibrushi, D., & Zhao, J. (2021). Reconsidering systematic factors during the Covid-19 pandemic - The rising importance of ESG. Finance Research Letters, 38, 101870. https://doi.org/10.1016/j.frl.2020.101870
7. Fama, E. F., & MacBeth, J. D. (1973). Risk, Return, and Equilibrium: Empirical Tests. Journal of Political Economy, 81(3), 607-636. http://www.jstor.org/stable/1831028
8. GSE. (2021, 26 avril). SRI label. https://www.lelabelisr.fr/glossaire/esg/
9. Hardy, C. (2020-2021). Has the Covid-19 crisis changed the way investors look at ESG criteria in their investment strategy?
10. Harvard Business School Online. (2022, 15 septembre). 7 ESG investment strategies to consider. Business Insights Blog. https://online.hbs.edu/blog/post/esg-investment-strategies
11. Hawley, J. (2017). ESG ratings and rankings. TruValue Labs. https://www.truvaluelabs.com/wp-content/uploads/2017/12/ESG-Ratings-and-RankingsAll-Over-the-Map.pdf
12. Hoffmann, A. O., Post, T., & Pennings, J. M. (2013). Individual investor perceptions and behavior during the financial crisis. Journal of Banking & Finance, 37(1), 60-74.
13. Leite, P. E. C., & Cortez, M. C. (2015). Performance of European socially responsible funds during market crises: Evidence from France. International Review of Financial Analysis, 40, 132-141. https://doi.org/10.1016/j.irfa.2015.05.012
14. Mǎnescu, C. (2011). Stock returns in relation to environmental, social and governance performance: Mispricing or compensation for risk? Sustainable Development, 19(2), 95-118. https://doi.org/10.1002/sd.510
15. Nassar, L. (2020). ESG IN EQUITY COUNTRY SELECTION.
16. Pedersen, L. H., Fitzgibbons, S., & Pomorski, L. (2021). Responsible investing: The ESG-efficient frontier. Journal of Financial Economics, 142(2), 572-597. https://doi.org/10.1016/j.jfineco.2020.11.001
17. Riedl, A., & Smeets, P. (2017). Why do investors hold socially responsible mutual funds? The Journal of Finance (New York), 72(6), 2505-2550. https://doi.org/10.1111/jofi.12547
18. Schueth, S. (2003). Socially Responsible Investing in the United States. Journal of Business Ethics, 43(3), 189-194. https://doi.org/10.1023/A:1022981828869
19. Skadden, Arps, Slate, Meagher & Flom LLP. (2023, 1er février). ESG in 2022 and Predictions for 2023. https://www.skadden.com/insights/publications/2023/02/esg-in-2022-and-predictions-for-2023
20. Wang, A. Y., & Young, M. (2020). Terrorist attacks and investor risk preference: Evidence from mutual fund flows. Journal of Financial Economics, 137(2), 491-514.
Published
2024-08-16
How to Cite
Mamdouh, T., Marouane, N., El Mahdi, E. I., & Younes, O. (2024). Exploring the Impact of Environmental, Social, and Governance Ratings in Investment Decisions During Uncertain Times: A Focus on the Energy Industry. European Scientific Journal, ESJ, 32, 328. Retrieved from https://eujournal.org/index.php/esj/article/view/18452
Section
ESI Preprints
Copyright (c) 2024 Tlaty Mamdouh, Nakhcha Marouane, El Idrissi El Mahdi, Ouahi Younes
This work is licensed under a Creative Commons Attribution 4.0 International License.
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