The Role of Political Divestiture for Sustainable Development

Abstract

In the wake of historical and political events, stakeholder pressure can trigger shareholders to divest from politically incorrect markets with the goal of accomplishing socio-political change. While mainstream development research advocates for more private investor involvement in sustainable development to achieve the Sustainable Development Goals (SDG)s in funding infrastructure, health, education and climate change mitigation; the following paper introduces political divestiture as an alternative means to implement sustainable development. While foreign investment can create positive conditions for improving societal development, also politically incorrect usage of funds or regulatory lacunae can do harm in the developing world. Political divestiture is portrayed as an innovative investment allocation to maximize positive development impacts of investment whilst minimizing associated risks of politically insecure markets. In an attempt to balance risk and access to capital, political divestiture is proposed as a means to implement sustainable development by removing funds from politically incorrect regimes in order to be channeled towards socially responsible and sustainable finance solutions. Future research outlooks on political divestiture as sustainable development driver comprise the antecedents and success factors as well as institutional and international frameworks to foster Financial Social Responsibility in the long-term international development domain.

Critical Analysis of Shareholder Benefits from Spin-Offs and Carve-Outs of Carbon-Intensive Businesses: A Study of the Energy Industry

“…In addition, divestments of various large companies have been analyzed so far, focusing on the share performance of both sites of the companies associated to related deals. Nevertheless, most studies focus on the performance and drivers of the divestments (Bergh & Sharp, 2015;Necoechea-Porras et al, 2021;Puaschunder, 2016;Rohleder et al, 2022). However, there are only limited studies, addressing how divestments of carbon-intensive businesses in the energy industry affect shareholders in times of climate change & increasing regulatory risks.…”