Exclusion strategy in socially responsible investment: One size does not fit all

L. Meunier and S. Ohadi

Journal of Behavioral and Experimental Finance, 2023, vol. 39, issue C

Abstract: A better overlap between the exclusion set used by socially responsible investments (SRI) managers and individual preferences could lead to higher adoption of SRI, which is in turn expected to promote a more sustainable development. In the first study, we find an essential mismatch: both the US (n=472) and the UK (n=560) respondents did not adhere to the classification of some of the most commonly excluded sin industries as being sinful. In the second study on US investors (n=1020), we show that two-thirds of respondents are willing to pay 2.1% of their initial investment to choose which industries should be excluded. In comparison, the rest of the sample is willing to pay 2.5% to have a panel of experts decide for them. These results suggest the need to refine the exclusion strategies used by funds and update the list of industries typically excluded to promote SRI.

Keywords: Ethical investing; ESG investing; Exclusion strategy; Sin stocks; Sustainable development (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:39:y:2023:i:c:s2214635023000436

DOI: 10.1016/j.jbef.2023.100829

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