Doing well by doing good with the performance of United Nations Global Compact Climate Change Champions
Moses Msiska,
Alex Ng () and
Randall K. Kimmel
Additional contact information
Moses Msiska: Development Bank of Zambia
Alex Ng: BNU-HKBU United International College
Randall K. Kimmel: Thompson Rivers University
Palgrave Communications, 2021, vol. 8, issue 1, 1-11
Abstract:
Abstract Are Climate Change Champions favorable to investors? This is the first study of portfolio performance of a fourth generation SRI screening strategy based on United Nations Global Compact firms who are Climate Change Champions. The operational changes made by UNGC firms are real and disproves the notion that UNGC firms are merely green-washing. We find that after firms join UNGC, there is a positive effect on long term portfolio performance. UNGC firms have lower volatility and so less risk than their competitors. We find an apparent mispricing of lower risk in market returns as standard asset pricing models may not be pricing investors’ aversion to climate change risk and preference for firms actively combating climate change. This lends support to Fama and Frenchs’ theory that says that these “tastes” are valid factors to provide a more complete asset pricing model. Our study encourages investment in UNGC-CCC firms as we find there is no underperformance penalty against a conventional portfolio because the lower return reflects lower risk. Thus, our evidence suggests that “doing good for society is also good for business.”
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://link.springer.com/10.1057/s41599-021-00989-2 Abstract (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:pal:palcom:v:8:y:2021:i:1:d:10.1057_s41599-021-00989-2
Ordering information: This journal article can be ordered from
https://www.nature.com/palcomms/about
DOI: 10.1057/s41599-021-00989-2
Access Statistics for this article
More articles in Palgrave Communications from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().