Socially Responsible Investing as a Competitive Strategy for Trading Companies in Times of Upheaval Amid COVID-19: Evidence from Spain

Abstract

<jats:p>Sustainable and responsible investing (SRI) is a strategy that seeks to combine both financial return and social good. The need to create and preserve SRI represents a key argument in investment decision-making, which leads other firms and investors to make strategic decisions beyond financial logic, based on environmental, social, and governance (ESG) factors. Within this framework, this paper aims to further clarify the understanding of potentially profitable strategies for firms during a global crisis such as a pandemic. Both primary and secondary data were gathered, and descriptive analyses were conducted. In Spain, several IBEX-35 companies announced donations amid the COVID-19 crisis. First, companies were classified into two groups based on donations made. For this, we searched for ESG online news. Then, profitability records amongst companies were identified and compared. In the trading session after the announcements, we found 12 of the 35 companies that made donations had a higher performance index of more than 2 and 3 points over the companies that did not make donations. With a weekly perspective, the difference was 91 and 60 basis points, respectively. These results suggest that in times of upheaval, investors base their strategy on ESG factors, contributing to the emerging literature on individual motives of SRI. Second, by conducting a survey and collecting data from 575 Spanish citizens, we conclude that after this crisis, people’s perceptions towards corporate social responsibility (CSR) will change, affecting consumption preferences in those companies that exhibited socially irresponsible or unsupportive behaviour. Hence, the reputation of firms, their social image, and social trust will play an important role in the near future.</jats:p>

Stock Market Reactions to COVID-19 Pandemic Outbreak: Quantitative Evidence from ARDL Bounds Tests and Granger Causality Analysis

“…The selected measures are depicted in Table 1. Alike Lyócsa, et al [66], the timespan was selected since over the beginning of the corona disaster, the value of the market dropped, whereas insecurity in the market amplified severely. In addition, we have included a wide range of variables that allow us to achieve our goal, such as COVID-19 measures, commodities, currencies, and 10-Year government bond spreads.…”

“…Singh [ 65 ] argued that investors are focused on environmental, social, and governance (ESG) portfolio since it centers on the long-term sustainability of corporations. In addition, Palma-Ruiz, et al [ 66 ] documented for a sample of 35 IBEX-35 companies that investors are more oriented towards ESG features. Therefore, Pástor and Vorsatz [ 67 ] recommended funds with high sustainability ratings, suggesting the opinion that sustainability is a requirement instead of opulence.…”

“…The selected measures are depicted in Table 1 . Alike Lyócsa, et al [ 66 ], the timespan was selected since over the beginning of the corona disaster, the value of the market dropped, whereas insecurity in the market amplified severely.…”

Impact of the Covid-19 pandemic on the requirements for accounting and analytical support of business

“…However, now that the role of business in society has evolved significantly, companies must take care of preserving social and environmental capital. During a pandemic, the attention of the public and government regulators to business decisions emphasizes the special role of the concept of social responsibility of business [5] and control of ESG criteria (Environmental, Social, Governance,), especially highlighting the S-factors [4]. During a pandemic, organizations can take advantage of opportunities to be socially responsible and "closer" to society.…”

Sensitivity Analysis as a Tool in Environmental Policy for Sustainability: The Case of Waste Recycling Projects in the Republic of Serbia

“…That is why SRI around the world has recorded significant growth in recent years, both in relative and absolute terms [5][6][7]. As Palma-Ruiz et al indicate, the COVID-19 pandemic environment has additionally stressed the need for the development of corporate social responsibility practices and SRI as a competitive strategy in times of upheaval [8]. Recycling, as a process of processing and reuse of used products with the aim of reducing the harmful effects on the environment and excessive consumption of natural resources, at the same time ensures a sustainable business future.…”