Abstract
Sustainable investing is an investment approach in line with the values of sustainable development and compliance with environmental, social, and corporate governance (ESG) criteria. The aim of the article is to propose a sustainable investing model (SIM) to support the decision-making of responsible individual investors. The proposed model aggregates economic indicators of investment decision-making, positive and negative ESG criteria, the market value of the stock, a systematic and unsystematic risk (expressed by the capital asset pricing model (CAPM)), thus widening the investment triangle by another peak—and that is sustainability. The research methodology is based on four key areas (environmental, social, corporate governance, and economic) associated with sustainable investments, stock market value, and risk. The research methodology of structural equation models is applied for the construction of the SIM. Mathematical equations are used to apply the SIM, which expresses values, the so-called factor scores. For the classification of sustainable investments, a classification scale is created that divides investments into three groups: above-average, average, and below-average. The SIM comprehensively evaluates individual ESG criteria and economic areas of sustainable investments, thus assisting the investor in deciding on sustainable investments of Czech joint-stock companies in the manufacturing industry, including benchmarking with other sustainable investments.
Highlights
IntroductionResponsible investment (SRI), ( responsible investing, sustainable investing) has long ceased to be on the margins of interest to investors and is undoubtedly becoming part of the mainstream
Responsible investment (SRI), has long ceased to be on the margins of interest to investors and is undoubtedly becoming part of the mainstream
Responsible investment is largely focused on tradable sustainable investments, namely, securities, stocks, or funds related to sustainability; for example, in 2012 the total value of assets of responsible investment funds managed in Europe was approximately EUR 252 billion
Summary
Responsible investment (SRI), ( responsible investing, sustainable investing) has long ceased to be on the margins of interest to investors and is undoubtedly becoming part of the mainstream. Responsible investment is largely focused on tradable sustainable investments, namely, securities, stocks, or funds related to sustainability; for example, in 2012 the total value of assets of responsible investment funds managed in Europe was approximately EUR 252 billion. Within six years it nearly doubled, reaching EUR 496 billion in assets under management on the responsible investing market before the end of 2018 [2]. Responsible investment (SRI) focuses mostly on mutual funds in the Czech Republic; these are analysed from various perspectives, including the impact of risk, liquidity, and profitability. Missing in this field are environmental, social, and corporate governance (ESG)
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