Fiordelisi, Franco and Galloppo, Giuseppe and Paimanova, Viktoriia (2023) Climate change shocks and socially responsible investments. Business Ethics, the Environment and Responsibility, 32 (1). pp. 40-56. DOI https://doi.org/10.1111/beer.12477
Fiordelisi, Franco and Galloppo, Giuseppe and Paimanova, Viktoriia (2023) Climate change shocks and socially responsible investments. Business Ethics, the Environment and Responsibility, 32 (1). pp. 40-56. DOI https://doi.org/10.1111/beer.12477
Fiordelisi, Franco and Galloppo, Giuseppe and Paimanova, Viktoriia (2023) Climate change shocks and socially responsible investments. Business Ethics, the Environment and Responsibility, 32 (1). pp. 40-56. DOI https://doi.org/10.1111/beer.12477
Abstract
Climate change's impact on investor behavior is a scantly investigated area in finance. This paper examines the performance of socially responsible exchange trade funds (ETFs) concerning conventional ETFs, in response to climate change events. We proxy climate change signals with a list of natural disaster events that NASA scientists relate to climate change. We contribute to existing literature, by using a very extensive information set of ETF strategies, not influenced by rating agencies' subjective evaluation policies, and covering almost 90% of the universe of worldwide sustainability thematic-oriented ETFs. This sample allows us to identify the socially responsible investment behavior in response to unpredictable climate change shocks. Our identification strategy accounts for endogeneity concerns and relies on two-stage least square (2SLS) approach finding that responsible investors react to climate change events by purchasing socially responsible investments. The relationship between climate change signals and return of investment in themes linked to the development of sustainability is positive. Interestingly enough, the sign of this relationship is different, when we disentangle the empirical results according to the asset type, confirming that investors shift their investments from equity funds to bond funds when market sentiment worsens. Our results indicate that policymakers should increase the support of firms adopting environmentally conscious business practices, while managers should boost a sustainable business strategy.
Item Type: | Article |
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Uncontrolled Keywords: | climate change; ETF; natural disasters; sustainable investments |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Essex Business School |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 26 Sep 2022 14:53 |
Last Modified: | 30 Oct 2024 20:49 |
URI: | http://repository.essex.ac.uk/id/eprint/33565 |
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Filename: Business Ethics Env Resp - 2022 - Fiordelisi - Climate change shocks and socially responsible investments.pdf
Licence: Creative Commons: Attribution-Noncommercial 3.0