Identifying ESG investment key indicators and selecting investment trust companies by using a Z-fuzzy-based decision-making model

Abstract

The rising regulatory and public pressure to align investments with sustainability causes an increasing need to analyze how investment institutions conduct and execute investment strategies related to their environmental, social, and corporate governance (ESG) funds. A thorough literature review shows that multiple criteria decision-making models are rarely used to discuss the relationships and weights of ESG fund indices. Furthermore, no ESG investment strategy evaluation framework has been created to deal with such funds. Therefore, a comprehensive framework is developed in this study to help select appropriate investment trust companies (ITCs). Z-numbers are incorporated into the proposed decision-making model in order to reflect information uncertainty and to assess the confidence of expert evaluations. First, a Z-based decision-making trial and evaluation laboratory approach is used to obtain the relationships and weights of indices to generate a causality diagram that allows decision-makers to quickly recognize the critical influencing factors in their evaluation systems. Then, a Z-based reference ideal method is applied to integrate the performance of the ITCs. The empirical application provides a demonstration of the usefulness of the proposed approach for selecting ITCs, which can aid to formulate appropriate strategies.