Sustainable Investing Model for Decision Makers (Based On Research of Manufacturing Industry in the Czech Republic)

Alena Kocmanová, Marie Pavláková Dočekalová, Tomáš Meluzín and Stanislav Škapa
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Alena Kocmanová: Faculty of Business and Management, Institute of Management, Brno University of Technology, Kolejni 2906/4, 612 00 Brno, Czech Republic
Marie Pavláková Dočekalová: Faculty of Business and Management, Institute of Management, Brno University of Technology, Kolejni 2906/4, 612 00 Brno, Czech Republic
Tomáš Meluzín: Faculty of Business and Management, Institute of Management, Brno University of Technology, Kolejni 2906/4, 612 00 Brno, Czech Republic
Stanislav Škapa: Faculty of Business and Management, Institute of Management, Brno University of Technology, Kolejni 2906/4, 612 00 Brno, Czech Republic

Sustainability, 2020, vol. 12, issue 20, 1-27

Abstract: Sustainable investing is an investment approach in line with the values of sustainable development and compliance with environmental, social, and corporate governance (ESG) criteria. The aim of the article is to propose a sustainable investing model (SI M ) to support the decision-making of responsible individual investors. The proposed model aggregates economic indicators of investment decision-making, positive and negative ESG criteria, the market value of the stock, a systematic and unsystematic risk (expressed by the capital asset pricing model (CAPM)), thus widening the investment triangle by another peak—and that is sustainability. The research methodology is based on four key areas (environmental, social, corporate governance, and economic) associated with sustainable investments, stock market value, and risk. The research methodology of structural equation models is applied for the construction of the SI M . Mathematical equations are used to apply the SI M , which expresses values, the so-called factor scores. For the classification of sustainable investments, a classification scale is created that divides investments into three groups: above-average, average, and below-average. The SI M comprehensively evaluates individual ESG criteria and economic areas of sustainable investments, thus assisting the investor in deciding on sustainable investments of Czech joint-stock companies in the manufacturing industry, including benchmarking with other sustainable investments.

Keywords: sustainability; sustainable investing; ESG criteria; market value of the stock; CAPM; Czech joint-stock companies; structural equation modelling (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:20:p:8342-:d:425887

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