SRI: Truths and lies

Bertrand Candelon, Jean-Baptiste Hasse and Quentin Lajaunie ()

No 2018034, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper proposes a skeptical look at the socially responsible investing (SRI) industry. Building upon a new database for European and American domestic equity mutual funds, it investigates whether there is a discrepancy between what is said (e.g., names or labels) and what is done (investments of mutual funds holdings) about SRI. It turns out that the correspondence between de jure and de facto SRI is weak. Additionally, using a novel nonlinear factor-augmented panel model, it is found that the de facto ethical positioning only matters for the funds’ financial performance. Both results shed new light on the SRI industry and pave the way for a new regulation framework.

Keywords: socially responsible investing (SRI); environmental, social and governance (ESG) criteria; ethical mutual funds; performane measurement (search for similar items in EconPapers)
JEL-codes: G11 G14 G23 (search for similar items in EconPapers)
Date: 2018-12-07
New Economics Papers: this item is included in nep-fmk and nep-hme
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2018034

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