The link between corporate sustainability and willingness to invest: new evidence from the field of ethical investments

Abstract

In recent decades, academia has addressed a wide range of research topics in the field of ethical decision-making. Besides a great amount of research on ethical consumption, also the domain of ethical investments increasingly moves in the focus of scholars. While in this area most research focuses on whether socially or environmentally sustainable businesses outperform traditional investments financially or investigates the character traits as well as other socio-demographic factors of ethical investors, the impact of sustainable corporate conduct on the investment intentions of private investors still requires further research. Hence, we conducted two studies to shed more light on this highly relevant topic. After discussing the current state of research, in our first empirical study, we explore whether besides the traditional triad of risk, return, and liquidity, also sustainability exerts a significant impact on the willingness to invest. As hypothesized, we find that sustainability shows a clear and decisive impact in addition to the traditional factors. In a consecutive study, we investigate deeper into the sustainability-willingness to invest link. Here, our results show that improved sustainability might not pay off in terms of investment attractiveness, however and conversely, it certainly harms to conduct business in a non-sustainable manner, which cannot even be compensated by an increased return.

Cleansing Investor’s Conscience: The Effects of Incidental Guilt on Socially Responsible Investment Decisions

“…Findings show that social aims of the firms are the main driver of most SRI investors rather than financial gains obtained when investing ethically. Lingnau et al, (2022) provide further support for this claim and show that corporate sustainability, together with traditional risk, return and liquidity, has a significant impact on individuals' willingness to invest (WTI). CSR practices within organisations matter for investors and their motivations are not solely affected by investments' profitability characteristics.…”

Determinanty dokonań polskich spółek publicznych w zakresie ESG

“…Informacje zawarte w tych raportach służą do komunikowania osiągnięć ESG różnym interesariuszom. To komunikowanie redukuje asymetrię informacji pomiędzy menedżerami i tymi interesariuszami, a przez to wpływa na podejmowanie przez niektórych inwestorów decyzji w sprawie inwestycji w akcje spółek zaangażowanych w działania CSR oraz zrównoważony rozwój (Martinez-Ferrero i in., 2017;Lingnau i in., 2022).…”

The Commercial and Financial Case for Responsible Business Conduct and What Works for Promotion

“…12 There is evidence that non-sustainable behaviours or doing nothing business mentality have a negative attractiveness and can deter investors. 13 The emerging empirical evidence shows that the business case for RBC is particularly strong when stakeholders such as investors, employees, and consumers, are more likely to reward proactive RBC approaches as corporations win their trust and increase transparency. 14 This has particularly been the case in light of the emerging climate crisis and wake of the Covid-19 pandemic.…”