Prioritizing the European Investment Sectors Based on Different Economic, Social, and Governance Factors Using a Fuzzy-MEREC-AROMAN Decision-Making Model

Andreea Larisa Olteanu (Burcă), Alina Elena Ionașcu (), Sorinel Cosma, Corina Aurora Barbu, Alexandra Popa, Corina Georgiana Cioroiu and Shankha Shubhra Goswami ()
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Andreea Larisa Olteanu (Burcă): Accounting Doctoral School, Bucharest University of Economic Studies, 010374 Bucharest, Romania
Alina Elena Ionașcu: Department of Finance and Accounting, Faculty of Economic Sciences, Ovidius University of Constanta, 900001 Constanța, Romania
Sorinel Cosma: Department of Economics, Ovidius University of Constanta, 900001 Constanta, Romania
Corina Aurora Barbu: Department of Business Administration, Ovidius University of Constanta, 900001 Constanta, Romania
Alexandra Popa: Department of Business Administration, Ovidius University of Constanta, 900001 Constanta, Romania
Corina Georgiana Cioroiu: Department of Economics, Ovidius University of Constanta, 900001 Constanta, Romania
Shankha Shubhra Goswami: Department of Mechanical Engineering, Abacus Institute of Engineering and Management, Hooghly 712148, India

Sustainability, 2024, vol. 16, issue 17, 1-46

Abstract: This study tackles the challenge of identifying optimal investment sectors amid the growing importance of environmental, social, and governance (ESG) factors, which are often complex and conflicting. This research aims to effectively evaluate and prioritize ten investment sectors based on twelve ESG criteria by integrating expert evaluations with two advanced multi-criteria decision-making (MCDM) methods. Three expert teams assessed each sector’s performance based on these criteria using fuzzy logic to manage uncertainties in expert judgments. The MEREC (MEthod based on the Removal Effects of Criteria) identified biodiversity and land use as the most critical factor, while transparency and disclosure was least significant. The AROMAN (Alternative Ranking Order Method Accounting for two-step Normalization) method was further used to rank the ten alternative sectors, with impact investing funds emerging as the top choice, followed by renewable energy and sustainable responsible investment funds. Conversely, ESG-compliant stocks, ESG-focused exchange-traded funds, and ESG-focused real estate investment trusts ranked the lowest. The study’s findings were validated through comparisons with other MCDM tools and sensitivity analysis, confirming the robustness of the proposed model. This research offers a valuable framework for investors looking to incorporate ESG considerations into their decision-making, promoting sustainable and responsible investing practices.

Keywords: European investment sectors; ESG; fuzzy; MCDM; MEREC; AROMAN (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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