In times of increasing demand for social equality, adherence to human rights and the tackling of global warming, awareness of sustainable investments is becoming more important in the context of the economic prosperity of a country. Investors, from the institutional as well as the private side, can support environmental, social and governance (ESG) issues by investing in sustainable assets. This research contributes to analysing the sustainable investment market in Europe and to developing market segments for the future. Socially Responsible Investments (SRIs) integrate ESG aspects into the decision-making process, whereby investments only focussing on the E (environmental aspects) are classified as Green Investments. The analysis of private investor sentiment is based on 12 structured interviews. Furthermore, the results for 20 institutional investors were analysed with the help of a database of sustainability reports. For the research methodology a content analysis was applied. Moreover, to evaluate the investor side and to gain further expertise in new market segments which have not yet been explored, an expert interview has been conducted with an issuer. The research concludes that there is an increasing demand for SRI and Green Investments. Especially in countries which have already implemented some regulations in this regard. However, for private and institutional investors profit maximization still plays a dominant role in the investment decision making process.
Chapter 1 provides an overview of the importance of investments in sustainable projects. Profit maximization is the common goal of national and multi-national enterprises in a capitalistic era. This chapter highlights that investors and companies can still achieve better return on their investments by investing in SRIs and projects related to ESG. Moreover, this chapter outline the research questions related to market share of traditional and sustainable investments.
Chapter 2 provides the fundamental background and actual status of research for the development of SRI and Green Investments. First, the foundation of the terminology SRI, Green Investments and ESG will be described. The chapter demonstrated the theoretical work of the segmentation theory and evaluates different segments. Further, the investor and issuer side will be described to understand who the main players in the sustainable market are. The theoretical work will end with regulatory background of the sustainable reporting standards and analyse the evolution of regulations by country. The last chapter of the literature review will analyse the current SRI and Green Investment market by the work of sustainable research institutions.
Chapter 3 describes the explorative strategy used for the research methodology. Therefore, the market was divided into two different segments. The geographical segments are the five major European countries Germany, the United Kingdom, the Netherlands, Switzerland and France. For the demographical segments the focus is on major institutional and different private investors. The major institutional investors selected for this research are commercial banks, insurance companies, endowments and pension funds. The private investors were separated into four different groups: working female, working men, retried female and retried men. The research deals with three different methods tailored to the different types of sources. First, private investors will be analysed by using 12 structured interviews. Second, the analysis of 20 institutional investors will be performed by using a content analysis from databases of sustainability reports published by financial corporations. The sustainability reports will be analysed by a mixed method and a qualitative method. The last method will be the interview of one expert analysis by thematic analysis. The last research tool used is an expert interview to evaluate the results from investors. The expert interview gives insights into a wider spectrum of knowledge and further develops unexpected segments. Further, Chapter 3 evaluates the validation of the data and ends with the methodological constraints.
Chapter 4 summarises the results from the research for the private investors, institutional investors and the issuer in accordance with the research methodology. After presenting the results, connections and interpretations will be drawn. Chapter 4 ends with a discussion of the results.
The final Chapter 5 answers each research question and the research objective. Moreover, the limitations of the research will be shown and advice for further research will be given.
- Muhammad Ashfaq, Ph.D., Professor of Finance and Accounting, IUBH University of Applied Sciences, Germany
- Verena Bochert, MA, IUBH University of Applied Sciences, Germany
Ashfaq, M., & Verena, B. (2020). Socially responsible investments in Europe. M3Publising. https://doi.org/10.5038/9781732127579
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