How do socially responsible investment and macroeconomic indicators interact with each other The case of selected developing countries

Abstract

Purpose- Sustainability is a multidimensional concept that expresses not only sensitivity to environmental policies, biodiversity and climate change, but also corporate governance principles and human rights. Accordingly, socially responsible investment is a kind of investment considering not only financial criteria but also environmental, social and corporate governance factors as well. In today's world, both the increase in social chaos, disasters and epidemics all over the world reveal the importance of addressing the issue of sustainability at the institutional and even governmental level and taking urgent action. In this context, sustainability indices have been created in many international stock markets since the end of the 1990s, which are created according to various criteria. These indices follow the companies that comply with the concept of sustainability. Today, many developing country stock markets also have sustainability indices. In this study, the interaction between the change in the sustainability index and macroeconomic indicators in developing countries was examined in order to be able to set forth the significance of the impact level of sustainability on the economy in the developing countries. Methodology- Within the scope of the subject, the importance of adapting to sustainability in the developing countries and the activities carried out are also discussed. Within the analysis, the annual percentage change in the sustainability index in seven selected developing countries and macroeconomic indicators such as change in consumer price index and change in dollar-based exchange rates were examined for the period of 2015-2022 by the panel data methodology. Findings- According to the findings, the impacts of changes in exchange rates and consumer price index on the sustainability indices are statistically significant. While exchange rates have negative effect, consumer price indices have positive effect on the sustainability indices. Conclusion- Findings are expected to reveal the supportability and importance of sustainability in the developing countries and shed light for future research that this issue needs and worth to be investigated more deeply. Keywords: Sustainability, socially responsible investment, macroeconomic indicators, developing countries, panel data. JEL Codes: C23, G15, Q50