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- Title
ENVIRONMENTAL INVESTING PRACTICES IN EUROPE: A HARBINGER OF FUTURE U.S. BEST PRACTICES?
- Authors
Soyka, Peter; Bateman, Mark; Feldman, Ira
- Abstract
The issue of whether voluntary, advanced environmental management practices add to or diminish the financial success of firms has been debated for many years. There is, however, a steadily increasing body of published literature and other evidence that demonstrates that well conceived and executed practices intended to enhance environmental performance/outcomes can create financial value net of their investment costs. At the same time, the expectation that the generally rational, well-functioning capital markets that exist in the U.S. would recognize this value has not been met to any significant degree. Recent studies have shown that, beyond the specialist field of socially responsible investing (SRI), there is very little consideration of corporate environmental management practices or environmental performance improvements on the part of ?mainstream? investors or analysts in either the equity or bond markets in the U.S. This article briefly profiles some of the reasons for this disconnect, which have become more clear based upon recent work by the authors and a number of other investigators. While the adoption of financial analysis and investing strategies that explicitly include environmental considerations is very limited in the U.S. (even in the SRI arena), the situation in European capital markets is strikingly different in certain key aspects. This article examines how European investing practices differ from those commonly used in the U.S., presents some of the legal and cultural factors that have contributed to these differences, and provides some examples of the ways in which environmental (and associated social and governance) information is used by European institutional investors seeking to create attractive risk-adjusted returns for their beneficiaries. The article describes our research process and findings, which were focused on four specific and sequential research tasks.
- Subjects
UNITED States; ETHICAL investments; CORPORATE environmentalism; ENVIRONMENTAL management; CORPORATE finance; SUSTAINABLE investing; CAPITAL market; EQUITY (Law); BOND market
- Publication
Environmental Research Journal, 2010, Vol 4, Issue 3/4, p335
- ISSN
1935-3049
- Publication type
Article