Investing Ethical: Harder Than You Think

Hans-Peter Burghof () and Marcel Gehrung ()
Additional contact information
Hans-Peter Burghof: University of Hohenheim
Marcel Gehrung: University of Hohenheim

Chapter Chapter 8 in Ethical Discourse in Finance, 2021, pp 149-168 from Palgrave Macmillan

Abstract: Abstract In this chapter, the authors use fundamental insights of modern capital market theory to find out if, and under which conditions, ethical investments can be expected to generate economic effects in line with ethical investors’ intentions. The authors distinguish between three different forms of ethical investments: direct investments, the use of specialised intermediaries, and market investments through, e.g., ethical funds. With regard to market investments, ethical investments should have no direct impact if they do not change the price of capital. Some authors assume that ethical investments should outperform the market, as the criteria depicts an unpriced risk factor. Others state that ethical investments should underperform the market, as investors are willing to support the respective projects with cheap capital. The main tenor of the empirical results on the topic is that both are wrong: the high degree of market perfection neutralises the good intentions of ethical investors. Thus, to have a direct impact, ethical investors must employ different and, presumably, costlier means.

Keywords: Green Finance; Ethical Investing; Socially Responsible Investing; Capital Market Theory; Efficient Market Hypothesis (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:psifcp:978-3-030-81596-7_8

Ordering information: This item can be ordered from
http://www.palgrave.com/9783030815967

DOI: 10.1007/978-3-030-81596-7_8

Access Statistics for this chapter

More chapters in Palgrave Studies in Impact Finance from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().