IDEAS home Printed from https://ideas.repec.org/a/prg/jnlcbr/v2025y2025i2id383p45-73.html
   My bibliography  Save this article

The Influence of Covid-19 Pandemic on Consideration of Corporate Social Irresponsibility by Sovereign Wealth Funds

Author

Listed:
  • Marty-Jörn Klein
  • Gabriela Chmelíková
  • Jozef Palkovič

Abstract

Sovereign wealth funds (SWFs) have a significant influence on global financial markets, with assets exceeding USD 11.2 trillion and accounting for 40% of the world's largest 100 asset owners' total assets. Understanding the drivers behind SWFs' investment decisions is crucial. This study examines the impact of the COVID-19 pandemic related to corporate social responsibility (CSR) and irresponsibility (CSI) compared to financial data on SWFs' investment decisions, analysing 72% of their total public equity holdings from 2019 to 2023. Findings reveal that SWFs prioritize company self-reported environmental, social and governance (ESG) metrics over public CSI information when making investment decisions. Furthermore, public equity holding CSI data have a more pronounced influence on the investment decision of SWFs in countries with higher transparency of sustainability. The study underscores the necessity for greater ESG integration into SWFs' investment strategies to demonstrate a commitment to sustainable investing practices. This research illuminates the path towards a more responsible and sustainable approach for SWFs on global financial markets.Implications for Central European audience: Our conclusions could help encourage greater ESG integration into investment strategies and promote sustainable investing practices more broadly, not limited to liquid assets, to showcase a sustainable "walk the talk". A special focus should be put on CSI's development of target investments. Future research might also consider whether the investment behaviour of SWFs is equivalent to that of other major investors, such as insurance companies and public pension schemes.

Suggested Citation

  • Marty-Jörn Klein & Gabriela Chmelíková & Jozef Palkovič, 2025. "The Influence of Covid-19 Pandemic on Consideration of Corporate Social Irresponsibility by Sovereign Wealth Funds," Central European Business Review, Prague University of Economics and Business, vol. 2025(2), pages 45-73.
    • Handle: RePEc:prg:jnlcbr:v:2025:y:2025:i:2:id:383:p:45-73
    DOI: 10.18267/j.cebr.383
    as

    Download full text from publisher

    File URL: http://cebr.vse.cz/doi/10.18267/j.cebr.383.html
    Download Restriction: free of charge
    File URL: http://cebr.vse.cz/doi/10.18267/j.cebr.383.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.cebr.383?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hoje Jo & Maretno Harjoto, 2011. "Corporate Governance and Firm Value: The Impact of Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 103(3), pages 351-383, October.
    2. Gompers, Paul A. & Kaplan, Steven N. & Mukharlyamov, Vladimir, 2022. "Private equity and Covid-19," Journal of Financial Intermediation, Elsevier, vol. 51(C).
    3. Carpantier, J.-F. & Vermeulen, W.N., 2018. "Emergence of sovereign wealth funds," Journal of Commodity Markets, Elsevier, vol. 11(C), pages 1-21.
    4. Ding, David K. & Ferreira, Christo & Wongchoti, Udomsak, 2019. "The geography of CSR," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 265-288.
    5. Dyck, Alexander & Lins, Karl V. & Roth, Lukas & Wagner, Hannes F., 2019. "Do institutional investors drive corporate social responsibility? International evidence," Journal of Financial Economics, Elsevier, vol. 131(3), pages 693-714.
    6. Amar, J. & Candelon, B. & Lecourt, C. & Xun, Z., 2019. "Country factors and the investment decision-making process of sovereign wealth funds," Economic Modelling, Elsevier, vol. 80(C), pages 34-48.
    7. Goss, Allen & Roberts, Gordon S., 2011. "The impact of corporate social responsibility on the cost of bank loans," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1794-1810, July.
    8. Malik, Ihtisham A. & Chowdhury, Hasibul & Alam, Md Samsul, 2023. "Equity market response to natural disasters: Does firm's corporate social responsibility make difference?," Global Finance Journal, Elsevier, vol. 55(C).
    9. Sarah E. Stone & Edwin M. Truman, 2016. "Uneven Progress on Sovereign Wealth Fund Transparency and Accountability," Policy Briefs PB16-18, Peterson Institute for International Economics.
    10. Dai, Liyan & Song, Chengxuan & You, Yu & Zhang, Wenqiao, 2022. "Do sovereign wealth funds value ESG engagement? Evidence from target firm's CSR performance," Finance Research Letters, Elsevier, vol. 50(C).
    11. Sudheer Chava, 2014. "Environmental Externalities and Cost of Capital," Management Science, INFORMS, vol. 60(9), pages 2223-2247, September.
    12. Bernardo Bortolotti & Veljko Fotak & William L. Megginson, 2015. "Editor's Choice The Sovereign Wealth Fund Discount: Evidence from Public Equity Investments," The Review of Financial Studies, Society for Financial Studies, vol. 28(11), pages 2993-3035.
    13. Azlan Amran & Lim Chia Yon & Shaian Kiumarsi & Amar Hisham Jaaffar, 2021. "Intellectual human capital, corporate social innovation and sustainable development: a conceptual framework," International Journal of Innovation and Sustainable Development, Inderscience Enterprises Ltd, vol. 15(1), pages 75-99.
    14. Svetlana Maslova, 2020. "Achieving sustainable development goals through public private partnership: critical review and prospects," International Journal of Innovation and Sustainable Development, Inderscience Enterprises Ltd, vol. 14(3), pages 288-312.
    15. Ioannis Oikonomou & Chris Brooks & Stephen Pavelin, 2014. "The Effects of Corporate Social Performance on the Cost of Corporate Debt and Credit Ratings," The Financial Review, Eastern Finance Association, vol. 49(1), pages 49-75, February.
    16. Julian F. Kölbel & Timo Busch & Leonhardt M. Jancso, 2017. "How Media Coverage of Corporate Social Irresponsibility Increases Financial Risk," Strategic Management Journal, Wiley Blackwell, vol. 38(11), pages 2266-2284, November.
    17. Mats Andersson & Patrick Bolton & Frédéric Samama, 2016. "Hedging Climate Risk," Financial Analysts Journal, Taylor & Francis Journals, vol. 72(3), pages 13-32, May.
    18. Haitham Nobanee & Maryam Alhajjar & Ghada Abushairah & Safaa Al Harbi, 2021. "Reputational Risk and Sustainability: A Bibliometric Analysis of Relevant Literature," Risks, MDPI, vol. 9(7), pages 1-21, July.
    Full references (including those not matched with items on IDEAS)

    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. Hans B. Christensen & Luzi Hail & Christian Leuz, 2021. "Mandatory CSR and sustainability reporting: economic analysis and literature review," Review of Accounting Studies, Springer, vol. 26(3), pages 1176-1248, September.
    2. He, Guanming & Li, Zhichao & Yu, Ling & Zhou, Zhanqiang, 2023. "Contribution to poverty alleviation: A waste or benefit for corporate financing?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    3. Reyes Samaniego-Medina & Pilar Giraldez-Puig, 2022. "Do Sustainability Risks Affect Credit Ratings? Evidence from European Banks," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(61), pages 720-720, August.
    4. Maretno Agus Harjoto, 2017. "Corporate social responsibility and degrees of operating and financial leverage," Review of Quantitative Finance and Accounting, Springer, vol. 49(2), pages 487-513, August.
    5. Paolo Capelli & Federica Ielasi & Angeloantonio Russo, 2021. "Forecasting volatility by integrating financial risk with environmental, social, and governance risk," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(5), pages 1483-1495, September.
    6. Dunbar, Craig & Li, Zhichuan (Frank) & Shi, Yaqi, 2020. "CEO risk-taking incentives and corporate social responsibility," Journal of Corporate Finance, Elsevier, vol. 64(C).
    7. Zhichuan Frank Li & Saurin Patel & Srikanth Ramani, 2021. "The Role of Mutual Funds in Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 174(3), pages 715-737, December.
    8. Huang, Chenchen & Luo, Di & Mukherjee, Soumyatanu & Mishra, Tapas, 2022. "To Acquire or to Ally? Managing Partners’ Environmental Risk in International Expansion," MPRA Paper 117591, University Library of Munich, Germany, revised 07 Jan 2023.
    9. Sung C. Bae & Kiyoung Chang & Ha-Chin Yi, 2018. "Corporate social responsibility, credit rating, and private debt contracting: new evidence from syndicated loan market," Review of Quantitative Finance and Accounting, Springer, vol. 50(1), pages 261-299, January.
    10. Naumer, Hans-Jörg & Yurtoglu, Burcin, 2022. "It is not only what you say, but how you say it: ESG, corporate news, and the impact on CDS spreads," Global Finance Journal, Elsevier, vol. 52(C).
    11. Mostafa Monzur Hasan & Ahsan Habib & Ruoyun Zhao, 2022. "Corporate reputation risk and cash holdings," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 667-707, March.
    12. Othar Kordsachia, 2021. "A risk management perspective on CSR and the marginal cost of debt: empirical evidence from Europe," Review of Managerial Science, Springer, vol. 15(6), pages 1611-1643, August.
    13. Hu, Haoshen & Lazar, Emese & Pan, Jingqi & Wang, Shixuan, 2024. "Environmental performance and credit ratings: A transatlantic study," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    14. Sandeep Yadav, 2020. "Institutional Ownership and Corporate Social Performance in Emerging Economies Multinationals: Evidence from India," Indian Journal of Corporate Governance, , vol. 13(2), pages 227-252, December.
    15. Lutfi Abdul Razak & Mansor H. Ibrahim & Adam Ng, 2020. "Which Sustainability Dimensions Affect Credit Risk? Evidence from Corporate and Country-Level Measures," JRFM, MDPI, vol. 13(12), pages 1-22, December.
    16. Ferriani, Fabrizio, 2023. "Issuing bonds during the Covid-19 pandemic: Was there an ESG premium?," International Review of Financial Analysis, Elsevier, vol. 88(C).
    17. Eichholtz, Piet & Holtermans, Rogier & Kok, Nils & Yönder, Erkan, 2019. "Environmental performance and the cost of debt: Evidence from commercial mortgages and REIT bonds," Journal of Banking & Finance, Elsevier, vol. 102(C), pages 19-32.
    18. Gangi, Francesco & Mustilli, Mario & Varrone, Nicola & Graziano, Domenico, 2023. "Target firms’ characteristics and the effects of sovereign wealth funds’ investments: Does cultural context of SWFs matter?," Research in International Business and Finance, Elsevier, vol. 65(C).
    19. Maretno A. Harjoto & Dongshin Kim & Indrarini Laksmana & Richard C. Walton, 2019. "Corporate social responsibility and stock split," Review of Quantitative Finance and Accounting, Springer, vol. 53(2), pages 575-600, August.
    20. Asimakopoulos, Panagiotis & Asimakopoulos, Stylianos & Li, Xinyu, 2023. "The role of environmental, social, and governance rating on corporate debt structure," Journal of Corporate Finance, Elsevier, vol. 83(C).

    More about this item

    Keywords

    Corporate social irresponsibility; corporate social responsibility; ESG; reputation risk; sovereign wealth funds;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

    Statistics

    Access and download statistics

    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:prg:jnlcbr:v:2025:y:2025:i:2:id:383:p:45-73. 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: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    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.