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Can sustainable investments outperform traditional benchmarks? Evidence from global stock markets
Author(s) -
Cunha Felipe Arias Fogliano de Souza,
Oliveira Erick Meira,
Orsato Renato J.,
Klotzle Marcelo Cabus,
Cyrino Oliveira Fernando Luiz,
Caiado Rodrigo Goyannes Gusmão
Publication year - 2020
Publication title -
business strategy and the environment
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.123
H-Index - 105
eISSN - 1099-0836
pISSN - 0964-4733
DOI - 10.1002/bse.2397
Subject(s) - sustainability , portfolio , business , corporate governance , sustainable development , investment strategy , corporate social responsibility , emerging markets , stock (firearms) , investment (military) , stock market , financial market , finance , economics , mechanical engineering , ecology , paleontology , horse , political science , market liquidity , law , biology , engineering , politics
To contribute to overcoming global sustainability challenges, investors have been increasingly interested in making sustainable investments and incorporating environmental, social and governance (ESG) criteria into their portfolio selection decisions and managerial activities. However, these investors and other agents interested in sustainable investment need updated and robust information to support their decision making. We analyzed the performance of several Dow Jones Sustainability Indices (DJSIs) and compared them with their respective market benchmarks from 2013 to 2018. The indices comprise the following regions and countries: the world, the Asia‐Pacific, Europe, emerging markets and the US. The analysis was conducted based on both classic and modern portfolio metrics. The results suggest that sustainable investment performance is still heterogeneous worldwide, but there is a promising opportunity for investors to obtain superior risk‐adjusted returns in certain regions while incorporating sustainable investment practices. The findings are of utmost importance to financial market practitioners, business managers, academics and other stakeholders interested in promoting investments, corporate practices and scientific knowledge to achieve the Sustainable Development Goals (SDGs).