IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i19p10868-d647021.html
   My bibliography  Save this article

Factors Affecting ESG towards Impact on Investment: A Structural Approach

Author

Listed:
  • Satyabrata Aich

    (Wellmatix Co., Ltd., Changwon 51395, Korea)

  • Ayusha Thakur

    (Electronics and Communication Engineering, Delhi Technological University, Delhi 110042, India)

  • Deepanjan Nanda

    (School of Mechanical Engineering, KIIT Deemed to be University, Bhubaneswar 751024, India)

  • Sushanta Tripathy

    (School of Mechanical Engineering, KIIT Deemed to be University, Bhubaneswar 751024, India)

  • Hee-Cheol Kim

    (Institute of Digital Anti-Aging Healthcare, College of AI Convergence, u-AHRC, Inje University, Gimhae 50834, Korea)

Abstract

Recent disasters have emphasized the need for further action to protect businesses and society from long-term sustainability threats. We believe that the crisis is hastening nascent ESG trends, and that the increased focus on a company’s environmental and social impact will last long after crises have passed. We refined three fundamental concepts that guide our thinking on investing based on environmental, social, and governance factors as our approach to sustainable investing has evolved. The ESG factor assessments are more of an inherent aspect of a sound investment process than a separate investment discipline. When ESG variables are considered, the focus is on long-term risk adjusted investment returns. Investors should choose the strategy that best matches with their goals and interests. ESG investing is not a simple yes or no answer. The research gap extracted from the previous studies is to determine the relationship among the influencing factors of ESG and its priority with their driving and dependence capabilities. We used an ISM Approach to uncover the interrelationships and influencing behavior among the elements for considering ESG in investment after conducting a thorough literature research and consulting with experts. Here interpretive structural modeling (ISM) was used to explore the links among such extracted factors and its interdependencies. There was also focus on the short-term and long-term factors to achieve our desired objective. Our research will assist businesses in attracting and obtaining finance. The results of this analysis will be helpful for leaders to understand the impact of ESG on the investment aspects of an organization.

Suggested Citation

  • Satyabrata Aich & Ayusha Thakur & Deepanjan Nanda & Sushanta Tripathy & Hee-Cheol Kim, 2021. "Factors Affecting ESG towards Impact on Investment: A Structural Approach," Sustainability, MDPI, vol. 13(19), pages 1-14, September.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:19:p:10868-:d:647021
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/19/10868/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/13/19/10868/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Benjamin Tobias Peylo & Stefan Schaltegger, 2014. "An equation with many variables: unhiding the relationship between sustainability and investment performance," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 4(2), pages 110-126, April.
    2. Dale Jorgenson, 1967. "The Theory of Investment Behavior," NBER Chapters, in: Determinants of Investment Behavior, pages 129-175, National Bureau of Economic Research, Inc.
    3. C. Vasanthakumar & S. Vinodh & K. Ramesh, 2016. "Application of interpretive structural modelling for analysis of factors influencing lean remanufacturing practices," International Journal of Production Research, Taylor & Francis Journals, vol. 54(24), pages 7439-7452, December.
    4. Samuel Drempetic & Christian Klein & Bernhard Zwergel, 2020. "The Influence of Firm Size on the ESG Score: Corporate Sustainability Ratings Under Review," Journal of Business Ethics, Springer, vol. 167(2), pages 333-360, November.
    5. Marikyan, Davit & Papagiannidis, Savvas & Alamanos, Eleftherios, 2019. "A systematic review of the smart home literature: A user perspective," Technological Forecasting and Social Change, Elsevier, vol. 138(C), pages 139-154.
    6. Yuchao Xiao & Robert Faff & Philip Gharghori & Darren Lee, 2013. "An Empirical Study of the World Price of Sustainability," Journal of Business Ethics, Springer, vol. 114(2), pages 297-310, May.
    7. Dan R. Anderson & Kenneth E. Anderson, 2009. "Sustainability Risk Management," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 12(1), pages 25-38, March.
    8. Kraus, Sascha & Schiavone, Francesco & Pluzhnikova, Anna & Invernizzi, Anna Chiara, 2021. "Digital transformation in healthcare: Analyzing the current state-of-research," Journal of Business Research, Elsevier, vol. 123(C), pages 557-567.
    9. Fotis Kitsios & Maria Kamariotou, 2021. "Artificial Intelligence and Business Strategy towards Digital Transformation: A Research Agenda," Sustainability, MDPI, vol. 13(4), pages 1-14, February.
    10. Satyabrata Aich & Sushanta Tripathy, 2014. "An interpretive structural model of green supply chain management in Indian computer and its peripheral industries," International Journal of Procurement Management, Inderscience Enterprises Ltd, vol. 7(3), pages 239-256.
    11. Elena Escrig-Olmedo & Maria Jesus Munoz-Torres & Maria Angeles Fernandez-Izquierdo, 2010. "Socially responsible investing: sustainability indices, ESG rating and information provider agencies," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 2(4), pages 442-461.
    12. Christoph Keding, 2021. "Understanding the interplay of artificial intelligence and strategic management: four decades of research in review," Management Review Quarterly, Springer, vol. 71(1), pages 91-134, February.
    13. R. Sivaprakasam & V. Selladurai & P. Sasikumar, 2015. "Implementation of interpretive structural modelling methodology as a strategic decision making tool in a Green Supply Chain Context," Annals of Operations Research, Springer, vol. 233(1), pages 423-448, October.
    14. Riad Shams, S.M. & Vrontis, Demetris & Chaudhuri, Ranjan & Chavan, Gitesh & Czinkota, Michael R., 2020. "Stakeholder engagement for innovation management and entrepreneurial development: A meta-analysis," Journal of Business Research, Elsevier, vol. 119(C), pages 67-86.
    15. Sayema Sultana & Norhayah Zulkifli & Dalilawati Zainal, 2018. "Environmental, Social and Governance (ESG) and Investment Decision in Bangladesh," Sustainability, MDPI, vol. 10(6), pages 1-19, June.
    16. Emiel Duuren & Auke Plantinga & Bert Scholtens, 2016. "ESG Integration and the Investment Management Process: Fundamental Investing Reinvented," Journal of Business Ethics, Springer, vol. 138(3), pages 525-533, October.
    17. Robert Ferber, 1967. "Determinants of Investment Behavior," NBER Books, National Bureau of Economic Research, Inc, number ferb67-1, March.
    18. Gunnar Friede & Timo Busch & Alexander Bassen, 2015. "ESG and financial performance: aggregated evidence from more than 2000 empirical studies," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(4), pages 210-233, October.
    19. Fotis Kitsios & Maria Kamariotou & Michael A. Talias, 2020. "Corporate Sustainability Strategies and Decision Support Methods: A Bibliometric Analysis," Sustainability, MDPI, vol. 12(2), pages 1-21, January.
    20. Leonidou, Erasmia & Christofi, Michael & Vrontis, Demetris & Thrassou, Alkis, 2020. "An integrative framework of stakeholder engagement for innovation management and entrepreneurship development," Journal of Business Research, Elsevier, vol. 119(C), pages 245-258.
    21. Yousuf Kamal & Craig Deegan, 2013. "Corporate Social and Environment-related Governance Disclosure Practices in the Textile and Garment Industry: Evidence from a Developing Country," Australian Accounting Review, CPA Australia, vol. 23(2), pages 117-134, June.
    22. Debora Spar, 1999. "Foreign Investment and Human Rights," Challenge, Taylor & Francis Journals, vol. 42(1), pages 55-80, January.
    23. Camelia Oprean-Stan & Ionica Oncioiu & Iulia Cristina Iuga & Sebastian Stan, 2020. "Impact of Sustainability Reporting and Inadequate Management of ESG Factors on Corporate Performance and Sustainable Growth," Sustainability, MDPI, vol. 12(20), pages 1-31, October.
    24. Fotis Kitsios & Maria Kamariotou, 2020. "Mapping new service development: a review and synthesis of literature," The Service Industries Journal, Taylor & Francis Journals, vol. 40(9-10), pages 682-704, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Theerasak Nitlarp & Supaporn Kiattisin, 2022. "The Impact Factors of Industry 4.0 on ESG in the Energy Sector," Sustainability, MDPI, vol. 14(15), pages 1-19, July.
    2. Fengyan Wang & Ziyuan Sun, 2022. "Does the Environmental Regulation Intensity and ESG Performance Have a Substitution Effect on the Impact of Enterprise Green Innovation: Evidence from China," IJERPH, MDPI, vol. 19(14), pages 1-24, July.
    3. Jin Wang & Zihan Hong & Hai Long, 2023. "Digital Transformation Empowers ESG Performance in the Manufacturing Industry: From ESG to DESG," SAGE Open, , vol. 13(4), pages 21582440231, October.
    4. Kumar Manaswi & Archana Singh & Vikas Gupta, 2023. "Building a Better Future with Sustainable Investments: Insights from Recent Research," Indian Journal of Human Development, , vol. 17(2), pages 320-343, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tan, Yafei & Zhu, Zhaohui, 2022. "The effect of ESG rating events on corporate green innovation in China: The mediating role of financial constraints and managers' environmental awareness," Technology in Society, Elsevier, vol. 68(C).
    2. Marcia Sierdovski & Luiz Alberto Pilatti & Priscila Rubbo, 2022. "Organizational Competencies in the Development of Environmental, Social, and Governance (ESG) Criteria in the Industrial Sector," Sustainability, MDPI, vol. 14(20), pages 1-20, October.
    3. Gallucci, Carmen & Santulli, Rosalia & Lagasio, Valentina, 2022. "The conceptualization of environmental, social and governance risks in portfolio studies A systematic literature review," Socio-Economic Planning Sciences, Elsevier, vol. 84(C).
    4. Rodrigo Zeidan, 2022. "Why don't asset managers accelerate ESG investing? A sentiment analysis based on 13,000 messages from finance professionals," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3028-3039, November.
    5. Tomasz Kusio & Mariantonietta Fiore, 2022. "Which Stakeholders’ Sector Matters in Rural Development? That Is the Problem," Energies, MDPI, vol. 15(2), pages 1-16, January.
    6. Wang, Hui & Riedinger, Jeffrey & Jin, Songqing, 2015. "Land documents, tenure security and land rental development: Panel evidence from China," China Economic Review, Elsevier, vol. 36(C), pages 220-235.
    7. Schimmelpfennig, Axel, 1998. "The celtic tiger faces the factor price frontier: Labour market adjustment in Ireland," Kiel Working Papers 855, Kiel Institute for the World Economy (IfW Kiel).
    8. Abdul Waheed, 2015. "Determinants of Domestic Private Investment: Test of Alternative Hypotheses for Pakistan," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 4(2), pages 35-43, April.
    9. Kataria, Karin & Curtiss, Jarmila & Balmann, Alfons, 2012. "Drivers of Agricultural Physical Capital Development: Theoretical Framework and Hypotheses," Factor Markets Working Papers 122, Centre for European Policy Studies.
    10. Krysiak, Frank C., 2006. "Stochastic intertemporal duality: An application to investment under uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 30(8), pages 1363-1387, August.
    11. Torsten Ehlers & Ulrike Elsenhuber & Kumar Jegarasasingam & Eric Jondeau, 2022. "Deconstructing ESG Scores: How to Invest with Your own Criteria," Swiss Finance Institute Research Paper Series 22-23, Swiss Finance Institute.
    12. Jorge Navas Rodenes & Jesus Marin Solano, 2006. "A comment on the cost of capital for investments with non-homogeneous components," Working Papers in Economics 146, Universitat de Barcelona. Espai de Recerca en Economia.
    13. Magnus Henrekson & Tino Sanandaji, 2011. "Entrepreneurship and the theory of taxation," Small Business Economics, Springer, vol. 37(2), pages 167-185, September.
    14. Viju Raghupathi & Jie Ren & Wullianallur Raghupathi, 2020. "Identifying Corporate Sustainability Issues by Analyzing Shareholder Resolutions: A Machine-Learning Text Analytics Approach," Sustainability, MDPI, vol. 12(11), pages 1-24, June.
    15. Elizabeth Baldwin, Yongyang Cai, Karlygash Kuralbayeva, 2018. "To build or not to build? Capital stocks and climate policy," GRI Working Papers 290, Grantham Research Institute on Climate Change and the Environment.
    16. Bauckloh, Michael Tobias & Beyer, Victor & Klein, Christian, 2022. "Does it pay to invest in dirty industries? New insights on the shunned-stock hypothesis," CFR Working Papers 22-07, University of Cologne, Centre for Financial Research (CFR).
    17. Willem H. Buiter, 1981. "Macroeconometric Modelling for Policy Evaluation and Design," NBER Technical Working Papers 0013, National Bureau of Economic Research, Inc.
    18. Lukas Benz & Stefan Paulus & Julia Scherer & Janik Syryca & Stefan Trück, 2021. "Investors' carbon risk exposure and their potential for shareholder engagement," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 282-301, January.
    19. Diao, Xinshen & McMillan, Margaret, 2018. "Toward an Understanding of Economic Growth in Africa: A Reinterpretation of the Lewis Model," World Development, Elsevier, vol. 109(C), pages 511-522.
    20. Monica Billio & Michele Costola & Iva Hristova & Carmelo Latino & Loriana Pelizzon, 2021. "Inside the ESG ratings: (Dis)agreement and performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(5), pages 1426-1445, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:19:p:10868-:d:647021. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.