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Drivers of Socially Responsible Investments Across Europe

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  2. Economics, Finance, Business & Management
  3. Credit and Capital Markets – Kredit und Kapital
  4. Vol. 53, Issue 4
  5. pp. 493–512

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Rochell, J., Cauthorn, T., Höck, A., Zwergel, B. Drivers of Socially Responsible Investments Across Europe. Credit and Capital Markets – Kredit und Kapital, 53(4), 493-512. https://doi.org/10.3790/ccm.53.4.493
Rochell, Janina; Cauthorn, Thomas; Höck, André and Zwergel, Bernhard "Drivers of Socially Responsible Investments Across Europe" Credit and Capital Markets – Kredit und Kapital 53.4, 2020, 493-512. https://doi.org/10.3790/ccm.53.4.493
Rochell, Janina/Cauthorn, Thomas/Höck, André/Zwergel, Bernhard (2020): Drivers of Socially Responsible Investments Across Europe, in: Credit and Capital Markets – Kredit und Kapital, vol. 53, iss. 4, 493-512, [online] https://doi.org/10.3790/ccm.53.4.493
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Drivers of Socially Responsible Investments Across Europe

Rochell, Janina | Cauthorn, Thomas | Höck, André | Zwergel, Bernhard

Credit and Capital Markets – Kredit und Kapital, Vol. 53 (2020), Iss. 4 : pp. 493–512

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Article Details

Publisher Name
Duncker & Humblot
DOI
https://doi.org/10.3790/ccm.53.4.493
Language
English
Pages
20
Keywords

Author Details

Janina Rochell MSc (corresponding author), University of Kassel, Department of Sustainable Finance, Henschelstr. 4, 34127 Kassel.

Thomas Cauthorn MSc, University of Kassel, Department of Sustainable Finance, Henschelstr. 4, 34127 Kassel.

André Höck, MSc, University of Kassel, Department of Sustainable Finance, Henschelstr. 4, 34127 Kassel.

Dr. Bernhard Zwergel, University of Kassel, Department of Sustainable Finance, Henschelstr. 4, 34127 Kassel.

References

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  3. Dumas, C./Louche, C. (2016): Collective beliefs on responsible investment. Business & Society, Vol. 55(3), 427–457.  Google Scholar
  4. Dutta, N./Mukherjee, D. (2012): Is culture a determinant of financial development? Applied Economics Letters, Vol. 19(6), 585–590.  Google Scholar
  5. Duuren, E. van/Plantinga, A./Scholtens, B. (2015): ESG Integration and the Investment Management Process: Fundamental Investing Reinvented. Journal of Business Ethics, Vol. 138(3), 525–533.  Google Scholar
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  9. Giamporcaro, S./Gond, J.-P. (2016): Calculability as Politics in the Construction of Markets: The Case of Socially Responsible Investment in France. Organization Studies, Vol. 37(4), 465–495.  Google Scholar
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  29. Scholtens, B./Sievänen, R. (2013): Drivers of Socially Responsible Investing: A Case Study of Four Nordic Countries. Journal of Business Ethics, Vol. 115(3), 605–616.  Google Scholar
  30. Sievänen, R./Rita, H./Scholtens, B. (2013): The drivers of responsible investment: The case of European pension funds. Journal of Business Ethics, Vol. 117(1), 137–151.  Google Scholar
  31. Steurer, R./Margula, S./Martinuzzi, A. (2008): Socially Responsible Investment in EU Member States: Overview of government initiatives and SRI experts’ expectations towards governments. Analysis of national policies on CSR, in support of a structured exchange of information on national CSR policies and initiatives. Final report to the EU High-Level Group on CSR provided by the Research Institute for Managing Sustainability. Vienna University of Economics and Business  Google Scholar
  32. Tabellini, G. (2008): Institutions and culture. Journal of the European Economic Association, Vol. 6(2–3), 255–294.  Google Scholar
  33. Wallis, M. von/Klein, C. (2015): Ethical requirement and financial interest: a literature review on socially responsible investing. Business Research, Vol. 8(1), 61–98.  Google Scholar
  34. Wins, A/Zwergel, B. (2015): Private ethical fund investors across countries and time: a survey-based review. Qualitative Research in Financial Markets, Vol. 7(4), 379–411.  Google Scholar
  35. Bauer, R./Smeets, P. (2015): Social identification and investment decisions. Journal of Economic Behavior & Organization, Vol. 117, 121–134.  Google Scholar
  36. Busch, T./Bauer, R./Orlitzky, M. (2015): Sustainable Development and Financial Markets. Business & Society, Vol. 55(3), 303–329.  Google Scholar
  37. Dumas, C./Louche, C. (2016): Collective beliefs on responsible investment. Business & Society, Vol. 55(3), 427–457.  Google Scholar
  38. Dutta, N./Mukherjee, D. (2012): Is culture a determinant of financial development? Applied Economics Letters, Vol. 19(6), 585–590.  Google Scholar
  39. Duuren, E. van/Plantinga, A./Scholtens, B. (2015): ESG Integration and the Investment Management Process: Fundamental Investing Reinvented. Journal of Business Ethics, Vol. 138(3), 525–533.  Google Scholar
  40. Eurosif (2006): European SRI Study 2006. Brussels, Belgium: Eurosif A.I.S.B.L. Retrieved from https://www.eurosif.org/research/.  Google Scholar
  41. Eurosif (2016): European SRI study 2016. Brussels, Belgium: Eurosif A.I.S.B.L. Retrieved from https://www.eurosif.org/research/.  Google Scholar
  42. Friede, G./Busch, T./Bassen, A. (2015): ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of Sustainable Finance & Investment, Vol. 5(4), 210–233.  Google Scholar
  43. Giamporcaro, S./Gond, J.-P. (2016): Calculability as Politics in the Construction of Markets: The Case of Socially Responsible Investment in France. Organization Studies, Vol. 37(4), 465–495.  Google Scholar
  44. Gjolberg, M. (2009): The origin of corporate social responsibility: global forces or national legacies? Socio-Economic Review, Vol. 7(4), 605–637.  Google Scholar
  45. Höck, A./Klein, C./Landau, A./Zwergel, B. (2020): The effect of environmental sustainability on credit risk. Journal of Asset Management, 1–9.  Google Scholar
  46. Hofstede, G. (1980): Culture’s consequences: International differences in work-related values. Beverly Hills, Sage Publications.  Google Scholar
  47. Hofstede, G. (1984): Culture’s consequences: International differences in work-related values (Vol. 5). Sage.  Google Scholar
  48. Jackson, G./Apostolakou, A. (2009): Corporate Social Responsibility in Western Europe: An Institutional Mirror or Substitute? Journal of Business Ethics, Vol. 94(3), 371–394.  Google Scholar
  49. Jansson, M./Biel, A. (2011): Motives to engage in sustainable investment: a comparison between institutional and private investors. Sustainable Development, Vol. 19(2), 135–142.  Google Scholar
  50. Jansson, M./Sandberg, J./Biel, A./Gärling, T. (2014): Should pension funds’ fiduciary duty be extended to include social, ethical and environmental concerns? A study of beneficiaries’ preferences. Journal of Sustainable Finance & Investment, Vol. 4(3), 213–229.  Google Scholar
  51. Kwok, C. C. Y./Tadesse, S. (2006): National culture and financial systems. Journal of International Business Studies, Vol. 37(2), 227–247.  Google Scholar
  52. Lavezzolo, S./Rodríguez-Lluesma, C./Elvira, M. M. (2018): National culture and financial systems: The conditioning role of political context. Journal of Business Research, Vol. 85, 60–72.  Google Scholar
  53. Lean, H. H./Ang, W. R./Smyth, R. (2015): Performance and performance persistence of socially responsible investment funds in Europe and North America. The North American Journal of Economics and Finance, Vol. 34, 254–266.  Google Scholar
  54. Leite, P./Cortez, M. C. (2016): The Performance of European Socially Responsible Fixed-Income Funds. Working Paper.  Google Scholar
  55. Nilsson, J. (2008): Investment with a Conscience: Examining the Impact of Pro-Social Attitudes and Perceived Financial Performance on Socially Responsible Investment Behavior. Journal of Business Ethics, Vol. 83(2), 307–325.  Google Scholar
  56. Renneboog, L./Horst, J. T./Zhang, C. (2008): Socially responsible investments: Institutional aspects, performance, and investor behavior. Journal of Banking & Finance, Vol. 32(9), 1723–1742.  Google Scholar
  57. Riedl, A./Smeets, P. (2017): Why do investors hold socially responsible mutual funds? The Journal of Finance, Vol. 72(6), 2505–2550.  Google Scholar
  58. Sandberg, J. (2008): The Ethics of Investing: Making Money or Making a Difference?  Google Scholar
  59. Sandberg, J. (2010): Socially Responsible Investment and Fiduciary Duty: Putting the Freshfields Report into Perspective. Journal of Business Ethics, Vol. 101(1), 143–162.  Google Scholar
  60. Sandberg, J./Juravle, C./Hedesström, T. M./Hamilton, I. (2009): The Heterogeneity of Socially Responsible Investment. Journal of Business Ethics, Vol. 87(4), 519–533.  Google Scholar
  61. Scholtens, B. (2006): Finance as a Driver of Corporate Social Responsibility. Journal of Business Ethics, Vol. 68(1), 19–33.  Google Scholar
  62. Scholtens, B. (2014): Indicators of responsible investing. Ecological Indicators, Vol. 36, 382–385.  Google Scholar
  63. Scholtens, B./Sievänen, R. (2013): Drivers of Socially Responsible Investing: A Case Study of Four Nordic Countries. Journal of Business Ethics, Vol. 115(3), 605–616.  Google Scholar
  64. Sievänen, R./Rita, H./Scholtens, B. (2013): The drivers of responsible investment: The case of European pension funds. Journal of Business Ethics, Vol. 117(1), 137–151.  Google Scholar
  65. Steurer, R./Margula, S./Martinuzzi, A. (2008): Socially Responsible Investment in EU Member States: Overview of government initiatives and SRI experts’ expectations towards governments. Analysis of national policies on CSR, in support of a structured exchange of information on national CSR policies and initiatives. Final report to the EU High-Level Group on CSR provided by the Research Institute for Managing Sustainability. Vienna University of Economics and Business  Google Scholar
  66. Tabellini, G. (2008): Institutions and culture. Journal of the European Economic Association, Vol. 6(2–3), 255–294.  Google Scholar
  67. Wallis, M. von/Klein, C. (2015): Ethical requirement and financial interest: a literature review on socially responsible investing. Business Research, Vol. 8(1), 61–98.  Google Scholar
  68. Wins, A/Zwergel, B. (2015): Private ethical fund investors across countries and time: a survey-based review. Qualitative Research in Financial Markets, Vol. 7(4), 379–411.  Google Scholar

Abstract

The European Union wants to foster the sustainable growth of the economy by using the financial markets as an intermediary. Thus, politicians need to know which factors account for differences in socially responsible investments (SRI) between countries to create an efficient framework, which supports SRI across Europe. This study aims to provide important insights about the drivers of SRI markets for politicians as well as academics. To the best of our knowledge, this is the first study that provides quantitative evidence on the framework established by Scholtens/Sievänen (2013) using a comparatively large data sample comprising 13 European countries during a period from 2005 to 2015. Our results can be summarized as follows: Firstly, we show that economic wealth and the size of the pension market of a country influence the size of the SRI market per capita. In particular, it seems that countries need a certain level of wealth and pension market size to start adopting basic sustainability strategies like negative screening. Secondly, we provide evidence that the differences in national SRI evolvement stem from the individual cultural characteristics of a nation. For example, masculinity, as seen by the revenue orientation of a country, prevents the emergence of more advanced SRI strategies, like engagement or integration. However, femininity, which relates to a more societal and environmental orientation, drives the emergence of more advanced SRI strategies. In this context, the recommendation to European policymakers is to opt for a minimum standard for the integration of more advanced SRI strategies, so that non-feminine countries also implement a deep-rooted sustainable investment behavior.

Table of Contents

Section Title Page Action Price
Janina Rochell / Thomas Cauthorn / André Höck / Bernhard Zwergel: Drivers of Socially Responsible Investments Across Europe 1
Abstract 1
I. Introduction 2
II. Literature Review and Hypothesis Development 3
III. Data and Methodology 7
IV. Limitations of the Study 9
V. Empirical Results 1
VI. Interpretation and Conclusion 1
Appendix 1
References 1

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