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An Analysis on the NASDAQ’s Potential for Sustainable Investment Practices during the Financial Shock from COVID-19

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  • Rachel Shields

    (Research Center, Geneva Business School, Rue de, La Voie-Creuse 16, 1202 Genève, Switzerland)

  • Samer Ajour El Zein

    (Economics and Finance Department, EAE Business School, Calle d’Aragó, 55, 08015 Barcelona, Spain)

  • Neus Vila Brunet

    (Faculty of Economics and Social Sciences, Universitat Internacional de Catalunya, Calle de Immaculada, 22, 08017 Barcelona, Spain)

Abstract

There is a growing demand for sustainable business practices and for sustainable and impact investment as has been signaled by the Sustainable Development Goals ratified by all the United Nations members. However, there is not that much evidence on how sustainable investments perform during crises compared to regular investments. This paper investigates if sustainable investments within the NASDAQ have a lower volatility rate when reacting to a significant global crisis such as the COVID-19 pandemic. It groups the shares of businesses with Corporate Social Responsibility (CSR) practices that are ranked 70% or higher given by CSRHub, Inc. and compares it to business shares with the lowest-ranked CSR business practices at 30% or lower. The top 30% and bottom 30% CSR stocks’ volatility will be predicted using variations of the GARCH model. The top 30% CSR stocks of the NASDAQ had a lower rate of volatility for a global crisis than the bottom 30% CSR stocks. Technology is the only sector whose top 30% showed higher volatility. However, the top 30% of companies in the Health Care and Utilities sectors show a higher increase in returns and a lower drop in returns. These results signal the higher uncertainty associated with some cutting-edge products and services offered by the top 30% of technology companies and the preference for more established companies that offer higher quality services when it comes to satisfying basic needs such as health and utilities in difficult times.

Suggested Citation

  • Rachel Shields & Samer Ajour El Zein & Neus Vila Brunet, 2021. "An Analysis on the NASDAQ’s Potential for Sustainable Investment Practices during the Financial Shock from COVID-19," Sustainability, MDPI, vol. 13(7), pages 1-20, March.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:7:p:3748-:d:525366
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    2. Zakaria Elkhwesky & Islam Elbayoumi Salem & Michal Varmus & Haywantee Ramkissoon, 2022. "Sustainable practices in hospitality pre and amid COVID‐19 pandemic: Looking back for moving forward post‐COVID‐19," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(5), pages 1426-1448, October.
    3. Dominika Ehrenbergerova & Simona Malovana & Caterina Mendicino, 2023. "How Do Climate Policies Affect Holdings of Green and Brown Firms' Securities?," Working Papers 2023/11, Czech National Bank.
    4. Mouncif Harabida & Bouchra Radi & Jean-Pierre Gueyie, 2022. "Socially Responsible Investment During the COVID-19 Pandemic: Evidence from Morocco, Egypt and Turkey," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(4), pages 1-65, April.
    5. Andrea Jacob & Martin Nerlinger, 2021. "Investors’ Delight? Climate Risk in Stock Valuation during COVID-19 and Beyond," Sustainability, MDPI, vol. 13(21), pages 1-17, November.

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