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The Performance of Socially Responsible Investing: A Review

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ESG Integration and SRI Strategies in the EU

Part of the book series: Palgrave Studies in Impact Finance ((SIF))

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Abstract

This chapter provides a comprehensive examination of the existing empirical literature on socially responsible investments (SRI) compared to traditional investments. More precisely, it focuses on analysing various studies that have explored the performance of SRI mutual funds and portfolios in comparison to non-SRI investments. The authors also discuss the different theories that support the possible outcomes of these studies. Our research indicates that SRI do not result in worse returns and seem to perform similarly to standard assets, but with less volatility, particularly during times of crisis. However, there are methodological issues in estimating the full financial and non-financial performance of SRI, leaving the question of whether SRI strategies outperform traditional investment strategies still unanswered. The authors suggest that future research should aim to assess the overall value of SRI, not just its financial returns, by developing new measures that consider both the economic and social value of SRI.

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Notes

  1. 1.

    We recall that fund managers mainly adopt three screening methods to identify SRI: negative screening (exclusion), positive screening (inclusion) and best in class (best performer in relation to the financial, social and environmental performance of each sector). Negative screening excludes companies involved in sectors that might be harmful to the environment or the society. Positive screening promotes companies with best ESG practices. Finally, the “best in class” screening selects those companies in a specific sector that demonstrate the best ESG credentials in their area of business. In some cases, companies identify a hybrid screening process considering all, or part of, the three methods mentioned above. (Capelle‐Blancard & Monjon, 2014; Erragraguy & Revelli, 2015; Leite & Cortez, 2015; Chap. 4).

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Authors and Affiliations

  1. Department of Economics and Management, University of Pisa, Pisa, Italy

    Lisa Gianmoena & Luca Spataro

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  1. Lisa Gianmoena
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  2. Luca Spataro
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Correspondence to Lisa Gianmoena .

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Editors and Affiliations

  1. Department of Economics and Management, University of Pisa, Pisa, Italy

    Luca Spataro

  2. Department of Economics and Management, University of Pisa, Pisa, Italy

    Maria Cristina Quirici

  3. Department of Law, University of Pisa, Pisa, Italy

    Gabriella Iermano

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Gianmoena, L., Spataro, L. (2023). The Performance of Socially Responsible Investing: A Review. In: Spataro, L., Quirici, M.C., Iermano, G. (eds) ESG Integration and SRI Strategies in the EU. Palgrave Studies in Impact Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-36457-0_3

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  • DOI: https://doi.org/10.1007/978-3-031-36457-0_3

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