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Sustainable development and financial system: Integrating ESG risks through sustainable investment strategies in a climate change context

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  • Maria Folqué
  • Elena Escrig‐Olmedo
  • Teresa Corzo Santamaría

Abstract

Sustainable Investment funds are one of the most appropriate ways for the financial system to contribute to sustainable development. However, the effective contribution of Sustainable Investment funds can vary widely depending on their management strategy. This paper aims to analyze which strategies or combinations of them allow practitioners to better manage ESG risks in ESG portfolios within a complete framework consistent with global challenges that focus on sustainability and carbon risk scores. To analyze the differences between Sustainable Investment strategies, we adopt a parametric analysis of variance method. We find that, on average, funds that only apply negative filters achieve worse ESG risk scores and show worse carbon risk. In sum, this study contributes with more in‐depth knowledge about the different outcomes in terms of sustainability risks of the different SI strategies.

Suggested Citation

  • Maria Folqué & Elena Escrig‐Olmedo & Teresa Corzo Santamaría, 2021. "Sustainable development and financial system: Integrating ESG risks through sustainable investment strategies in a climate change context," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(5), pages 876-890, September.
    • Handle: RePEc:wly:sustdv:v:29:y:2021:i:5:p:876-890
    DOI: 10.1002/sd.2181
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    2. Hoang, Thi Hong Van & Pham, Linh & Nguyen, Thanh Thi Phuong, 2023. "Does country sustainability improve firm ESG reporting transparency? The moderating role of firm industry and CSR engagement," Economic Modelling, Elsevier, vol. 125(C).

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