Sustainable Investment Research Articles

Fintech's impact on conventional and Islamic sustainable equities: Short- and long-term contributions of the digital financial ecosystem

This study investigates the integration of cutting-edge financial technologies, such as distributed ledger diversity, next-generation payment trackers, democratized banking, and cryptocurrency, and their impact on global sustainability and ethical ratings in Islamic markets. Our analysis spans the period from May 31, 2018, to May 10, 2023, and uses a novel analytical framework based on quantile time–frequency connectedness and causality analysis. Results showed that democratized banking, future payment opportunities, and sustainability-screened markets had stronger associations than distributed ledger technologies and crypto-based tokenization. Second, Islamic sustainable markets have slightly closer ties to the digital financial ecosystem than traditional responsible investments. Third, causality analysis revealed bidirectional relationships between sustainable markets and democratized banking and potential payment opportunities in the short to mid-term. Fourth, in the short term, there was unidirectional causality from conscious markets to investments in digitized currencies and blockchains; however, no long-term causality between the digital financial ecosystem and sustainability investments. Fifth, the diversity of distributed ledgers had a limited relationship with green investments, whereas advanced transaction monitoring platforms and inclusive financial infrastructure could serve as catalysts for nature-based portfolios. These findings inform policymakers in green finance and provide insights for digital financial network strategists, investors, and regulators, enabling sustainable interdisciplinary investment practices. This comprehensive examination sheds light on the evolving landscape of sustainable finance in the context of rapidly advancing financial technologies, paving the way for informed decision-making and strategic planning in the field of green investments.

A Financial Analysis and Valuation of Tesla

The pressing issue of global warming, fueled by excessive carbon dioxide emissions, has spurred global concern. Researchers highlight the potential of new energy vehicles, particularly electric cars, in significantly mitigating greenhouse gas emissions. As demand for electric vehicles rises, attention turns to companies like Tesla, spearheading this transformative industry. This study delves into Tesla's financial landscape in 2023, juxtaposing it against other electric vehicle manufacturers, aiming to unveil Tesla's comparative advantages. Leveraging data sourced from Yahoo Finance, the study employs a comprehensive financial analysis, focusing on liquidity, solvency, profitability, and investment metrics. Results underscore Tesla's remarkable performance across these dimensions, showcasing its impressive profitability, operational prowess, financial stability, and investment appeal relative to its competitors. This report stands poised to guide investors intrigued by Tesla's potential, offering valuable insights into the company's financial health and positioning within the burgeoning electric vehicle sector. Through such analysis, stakeholders can make informed decisions in navigating the dynamic landscape of sustainable transportation investments.

Simple soil water monitoring tools increase yield and income of smallholder farmers in Malawi: A case study of four irrigation schemes

AbstractThe area under irrigation in Malawi has increased, but productivity is still low due to farmers' lack of irrigation knowledge. This paper describes a ‘people‐centred learning’ approach aimed at improving water management in smallholder irrigation schemes. The work was conducted in Malawi, where farmers at the Bwanje, Tadala, Nanzolo and Matabwa irrigation schemes were provided with soil water sensors that showed whether the soil was wet, moist or dry using colours, making it easy for farmers to understand. Indicators related to water management and soil water status were monitored during the 2017 and 2018 irrigation seasons. The yield and gross margins were then assessed. The results show that farmers can effectively identify irrigation‐related problems and act on the information provided by the tools. The yield increased by more than 80%, and the gross margins increased by more than threefold across all the schemes. Based on the findings outlined, the use of soil water sensors enhances farmers' understanding of water management, prompting behavioural changes and measurable improvements in irrigation productivity. Furthermore, this study concludes that improving farmers' knowledge is essential for transforming smallholder irrigation schemes into profitable and sustainable investments.

Developing Islamic-sustainable and responsible investment (i-SRI) criteria based on the environmental, social and governance (ESG) concept

Purpose The practices of sustainable and responsible investment (SRI) among Islamic financial institutions (IFIs) nowadays still rely on the existing environmental, social and governance (ESG) criteria. However, based on observation, some of the existing criteria listed by the reports of certain authorities and organizations do not seem to be aligned with Shariah principles. Therefore, this study aims to investigate those criteria to help develop Islamic-SRI (i-SRI) criteria based on the ESG concept. Design/methodology/approach This study adopted the qualitative method via content analysis of documents and interviews with experts. Findings Based on the analysis, a set of i-SRI criteria is developed based on the ESG concept, of which 33 elements are environmental, 50 elements are social and 26 elements are governance issues. Overall, this study finds that there is no obvious contradiction with the Islamic philosophy in the existing ESG criteria, with the exception of four criteria, i.e. promoting human rights, freedom of expression, freedom of censorship and freedom of association under social criteria. These four existing criteria are not aligned with Islamic teaching and not appropriate with Islamic ESG criteria. Practical implications The creation of Islamic ESG criteria can assist relevant authorities to improve the current ESG criteria and to embed an Islamic perspective within it. Originality/value This study developed a set of i-SRI criteria, which may be suitable as a source of reference to relevant parties.

Asymmetric Effects of Development Finance Institutions Funding (DFIs) on Investment in Zimbabwe: A Futuristic Perspective

Introduction - This study aimed to explore the anticipated asymmetric effects of developmental finance institutions (DFIs) funding on investment in Zimbabwe. Given the volatile nature of development finance, Zimbabwe has faced challenges in effectively mobilizing aid, often struggling to persuade donors due to government spending plans and political factors. The research sought to investigate the potential asymmetrical linkages between DFIs funding and investment in Zimbabwe. Methodology: Model and Variables - To examine the futuristic asymmetric relationship between DFIs funding and investment in the Zimbabwean economy, a non-linear NARDL modelling approach will be employed. This methodology will estimate the projected non-linear co-integrating association between positive and negative shocks to DFIs funding and investment. The data set consisted of projected annual macroeconomic variables for Zimbabwe obtained from world bank and IMF. Results - In the short run, it was found that both positive and negative shocks influence future investment, with negative shocks expected to have a larger effect. These negative shocks arise from economic downturns or external shocks, while positive shocks could result from increased funding or favourable policy changes. In the long run, it was found that positive shocks to DFIs funding have a positive impact on investment, leading to increased economic growth and development. Conclusion and Recommendations - Based on the results, DFIs funding should exhibit an asymmetric relationship with investment in Zimbabwe. It is crucial for the government of Zimbabwe to proactively plan for these anticipated asymmetric effects and develop strategies to maximize the benefits of DFIs funding. By implementing the recommendations, Zimbabwe can be able to ensure a more favourable environment for future DFIs funding, fostering sustainable investment and economic growth.

ESG performance and analyst recommendations: evidence from sustainability analysts in the Chinese market

PurposeIn this study, we examine the influence of a firm’s environmental, social, and governance (ESG) performance on analysts’ stock recommendations and earnings forecast accuracy in the Chinese context.Design/methodology/approachWe take a textual analysis approach to analyst research reports issued between 2010 and 2019, and differentiate between two distinct analyst categories: “sustainability analysts,” which refer to those more inclined to incorporate ESG information into their analyses, and “other analysts.”FindingsOur evidence indicates that sustainability analysts tend to be significantly more likely than others to provide positive stock recommendations and demonstrate enhanced accuracy in forecasting earnings for companies with superior ESG performance. Our additional analyses reveal that this finding is particularly prominent for analysts who graduated from institutions emphasizing the protection of the environment, those recognized as star analysts, those affiliated with ESG-oriented brokerages, and forecasts made by analysts in the later part of the sample period. Our findings further indicate that sustainability analysts exhibit a more pronounced negative response when confronted with a negative ESG event.Originality/valueIn general, the evidence from this study reveals the interplay between ESG factors and analyst behavior, offering valuable implications for both financial analysts and sustainable investment strategies.

Unveiling the dynamic nexuses between foreign investment, trade openness, energy consumption, and CO2 emissions in South Africa: A vector error correction model approach

Amidst the rising carbon emissions posing significant challenges for the global environment, there exists an inadequate recognition of the profound implications associated with foreign investment, trade openness, and energy consumption in South Africa. This study investigates the dynamic relationship among foreign investment, trade, energy, and the interactive effect of foreign investment and trade openness on environmental pollution in South Africa using time series data from 1990 to 2020. The results from the Johansen cointegration analysis and vector error correction model confirm a sustained long-term relationship among foreign investment, trade, energy, and CO2 emissions. This suggests that any deviations from CO2 emissions equilibrium would gradually self-adjust autonomously. This study reveals the long-run positive effects of trade openness and energy consumption on environmental pollution, while foreign investment exhibits a persistent negative impact on environmental pollution in the long run. Economic growth reduces CO2 emissions, while population growth and inflation are detrimental to the environment in the long run. The interaction between foreign investment and trade reduces environmental pollution in the short and long run. The Granger causality tests show a two-way causal relationship between population growth and CO2 emissions and a one-way causal connection among other variables, enlightening the linkage among these critical factors. The study offers several policy suggestions including environmentally friendly trade practices, investing in energy efficiency and transition, and promoting sustainable foreign investment in South Africa to achieve long-term economic sustainability while curbing environmental impact.

Sustainable investments in volatile times: Nexus of climate change risk, ESG practices, and market volatility

Climate change poses an unprecedented threat to global stability, presenting complex political, economic, and social risks. As financial markets become increasingly intertwined with sustainability considerations, understanding the implications of climate risk is paramount. This study investigates the relationships between climate change risk (CCRISK), environmental, social, and governance (ESG) factors, and the United Kingdom's stock market volatility (SMVOL). Using data from 2012 to 2021, we employ a robust analytical approach, including ordinary least squares and a generalised method of moments, to assess these relationships. Our findings reveal several key insights. First, we prove a positive and statistically significant relationship between CCRISK and SMVOL, indicating that firms with higher CCRISK tend to exhibit higher SMVOL. Second, we demonstrate a negative and statistically significant relationship between ESG scores and SMVOL, suggesting that firms with higher ESG scores tend to experience lower SMVOL. Furthermore, we introduced a moderation analysis examining how specific ESG dimensions moderate the CCRISK-SMVOL relationship. Our results reveal nuanced interactions, emphasising that different ESG dimensions influence the relationship differently. The findings offer strategic insights for investors, policymakers, and the advancement of sustainable finance.

Re-intermediation of the crypto asset ecosystem by banks: An empirical study on acceptance drivers among the populace

After the initial surge in decentralized finance, widespread public adoption did not materialize. A predominant portion of the populace harbors distrust towards the crypto asset market. Conversely, banks, serving as intermediaries in financial management, enjoy heightened trust. The contemporary development within the banking sector indicates an inclination towards integrating into the crypto asset market. This integration results in new business models for banking institutions and emergent opportunities for their clientele. Prior research addresses perceptions surrounding cryptocurrencies. The present research augments this field by investigating the acceptance of crypto assets. Specifically, we conducted an empirical user study to analyze investing behaviors. By adapting the theoretical framework of the technology acceptance model to the unique characteristics of crypto assets, we highlight acceptance drivers. Notable variances in awareness of crypto assets affect investment decisions. The findings of this study contribute to social welfare by identifying impediments to sustainable investment practices. Additionally, these insights facilitate a more sophisticated comprehension of strategic alternatives available to banking institutions.

My money—My problem: How fear‐of‐missing‐out appeals can hinder sustainable investment decisions

AbstractCryptocurrencies (cryptos) have detrimental environmental effects due to their massive energy consumption. While several green crypto coins have been launched, the mainstream—environmentally unfriendly coins—still lead the market. In this study, we explore if influencer marketing, specifically fear‐of‐missing‐out (FOMO) appeals, can contribute to promoting green crypto coin purchases to encourage sustainable investments. The results of five studies (two lab experiments using neurobiological sensors, two online experiments, and a discrete choice experiment) show that social media postings conveying FOMO appeals decrease (increase) green crypto (normal crypto) coin investments. The results further show that message congruence and emotional value perceptions mediate this effect. Finally, we demonstrate that the observed results hold when adding governance and regulatory crypto support as well as the crypto price path evolution to the choice. The results provide notable theoretical contributions and implications for policymakers concerned with fostering more sustainable consumption behavior in the crypto context.

Exploring Sustainable Investment: In-Depth Analysis of Socially Responsible Investing (SRI) and ESG Strategies

Theoretical background: In recent years, there has been an increase in social and environmental awareness, which has forced companies to change their approach to investment. Large companies are burdened with responsibility for contemporary, global problems such as the depletion of natural resources, the ongoing process of environmental degradation and inequalities in living standards between poor and rich countries. Therefore, when making investments, companies must evaluate them not only in terms of financial returns, but also in terms of their social, ecological and ethical impact. Two key approaches to this new investment paradigm stand out: socially responsible investment (SRI) and ESG investment (a three-pronged view of environmental, social and corporate governance). They focus on sustainable investments in order to achieve positive results for investors’ portfolios as well as for society and the environment. Purpose of the article: The following article examines both approaches, analysing their relevance, objectives, tools and economic and social impacts. Research methods: For this purpose, specialist journals published between 2001 and 2023 were searched in the Web of Science database. A literature review of socially responsible investment and ESG investment shows that interest in these concepts has increased rapidly in recent years. In addition, reports available on the websites of selected companies were analyzed. Main findings: The scientific impact on the studied concepts also makes it possible to determine future research directions. The literature contains results confirming that companies applying these approaches in their operations, achieve better results.

Risk exposure in ESG-driven portfolios: A wavelet study within the tail-concerned insurance sector

This paper employs wavelet analysis methodology to examine the pairwise time-frequency connectedness and lead-lag relationships between ESG rating changes and insurance equity portfolios' risk exposure. Focusing on the influence of ESG rating changes rather than absolute levels, it contributes to existing research, shedding light on the nuanced dynamics within the insurance sector. The findings underscore the importance of incorporating ESG considerations into portfolio risk assessments for policymakers and portfolio managers alike. Notably, the study reveals the impact of ESG upgrades on portfolio risk exposure, suggesting potential higher returns but also higher total volatility. Moreover, disaggregate risk (total, downside and upside) analysis uncovers insights into environmental, social, and governance factors, emphasizing the relevance of navigating beyond the total volatility and the overall ESG ratings. These insights inform adaptive risk management strategies aligned with evolving ESG standards, contributing to sustainable and risk-conscious economic and investment decisions within the insurance sector.

High‐Temperature Heat Pumps for Industrial Use

AbstractCompared to heat pumps established in the building sector, high‐temperature heat pumps (HTHPs) suitable for industrial use still face challenges, not only from a mechanical engineering point of view but also regarding integration into existing processes. They need to supply larger amounts of heat at higher temperatures. The mere replacement of a gas boiler by an HTHP will rarely deliver an energy‐efficient solution. Instead, these units must often be tailored to the application and vice versa, making specifications a complex task. This paper intends to link thermodynamic and economic basics of HTHPs to the process engineering of the actual production process. It also ventures an outlook on the economic and regulatory boundary conditions in the EU as corner stones for a sustainable investment decision.

Preferences for ethical intermediaries and sustainable investment decisions in micro-firms: The role of financial literacy and digital financial capability

This study analyses the effects of financial literacy and digital financial capabilities in shaping entrepreneurs’ preferences for ethical financial intermediaries and sustainable investment decisions. Exploiting novel survey data on Italian micro-enterprises, we find that more financially literate business owners have higher preferences for intermediaries with a strong ethical stance, are more likely to make investments inspired by environmental and social criteria and have a higher awareness of sustainable financial products. Moreover, digital financial competencies are found to play a significant role in enhancing preferences for ethical intermediaries and sustainable investment decisions. Finally, we show that the beneficial effect of financial literacy is mostly direct, while the indirect effect operating through higher digital financial abilities, despite being statistically significant, impacts firms’ sustainable financing and investing decisions only to a lower extent.

ESG INTEGRATION IN FINANCIAL SECTORS: A CASE OF SUSTAINABILITY INVESTMENT STRATEGIES

Purpose: The integration of Environmental, Social, and Governance (ESG) factors in the financial sector, aiming to comprehend the present tactics, evaluating the efficiency of sustainability investment, and recognizing the challenges and opportunities that financial firms face while implementing ESG criteria. Design/Methodology/Approach: A semi-systematic review methodology, looking at secondary data from a variety of released papers and articles collected through platforms such as Google Scholar, ResearchGate, Shodh Ganga, and Springer. This method provides an in-depth analysis of trends and difficulties in ESG integration in the financial sector. Findings: The financial institution under consideration has greatly improved its business image and trademark value by implementing ESG standards. Integrating ESG principles has helped to manage risks, improve long-term financial viability, and meet the demands of regulators. However, the organization faces obstacles such as data quality issues, the credibility of ESG claims, and the need to combine short-term financial goals with long-term sustainability objectives. The case study emphasizes the potential for new financial products, as well as the importance of strong regulatory frameworks to facilitate ESG integration. Practical Implications: The results suggest that uniform reporting standards and complete ESG compliance procedures are essential for successful ESG integration. The financial institution should integrate ESG into its essential business strategies to improve productivity and stakeholder trust. Also, regulatory settings must promote innovation and standardization of ESG practices, as well as raise market knowledge and educate consumers about the financial ramifications of these principles. Originality/Value: This work provides a thorough examination of the current level of ESG integration in the financial sector, emphasizing both the benefits and problems. It makes practical ideas for enhancing ESG practices and emphasizes the need for more study to better understand the long-term effects of ESG on financial success. Paper Type: Case study KEYWORDS: ESG Integration, Sustainability Investment Performance, Sustainability in Finance

TRANSFORMING MEDELLÍN: ARCHITECTURE AND URBAN DESIGN AS AGENTS OF SOCIAL CHANGE

This article examines the transformative impact of Sergio Fajardo’s mayoral administration (2003–2007) in Medellín, Colombia, focusing on architecture and urban design projects that have promoted equity. Central to this urban renaissance was the Proyecto Urbano Integral (PUI) Nororiental, which revitalized informal settlements in the city’s northeastern zone. The initiative leveraged financing from Empresas Públicas de Medellín (EPM), a city-owned utility company, ensuring sustainable investment in public works without reliance on international loans. This financial model enabled the redistribution of funds to Medellín’s poorest neighborhoods, fostering transparency and combating corruption. Key to this urban strategy was the involvement of the Empresa de Desarrollo Urbano (EDU) which implemented the PUI with an intersectional planning approach combining public transit, education, culture, recreation, health, and safety initiatives. The PUI emphasized community participation through “Imaginary Workshops” promoting ownership and engagement among residents. The PUI Nororiental, enhanced by the Metrocable transit system and associated public spaces, has successfully integrated isolated neighborhoods while reducing violence and fostering social cohesion. Despite critiques of high costs, this article argues that quality public spaces and civic buildings promote community pride and destigmatization. Medellín’s “social urbanism” serves as a model for addressing inequity in Latin America and the broader Global South, demonstrating how architecture and urban design can drive social change.

Assessing sustainable development pathways for water, food, and energy security in a transboundary river basin

Worldwide hundreds of millions of people suffer from water, food and energy insecurity in transboundary river basins, such as the Zambezi River Basin. The interconnected nature of nexus is often not recognized in investment planning and many regional policymakers lack adequate tools to tackle it. Future growing demands and climate change add an additional challenge. In this study, we combine policy relevant co-developed stakeholder scenarios and integrated nexus modeling tools to identify key solutions to achieve sustainable development in the Zambezi. Results show that siloed development without coordination achieves the least economic and social benefits in the long term. Prioritizing economic benefits by maximizing the use of available natural resources results in the expansion of irrigated areas by more than a million hectares and increase in hydropower production by 22,000 GWh/year in the coming decades, bringing significant economic benefits, up to $12.7 billion per year, but causes local water scarcity and negative impacts on the environment. Combining environmental protection policies with sustainable investments of $7.2 billion per year (e.g. groundwater pumping and wastewater treatment and reuse, irrigation efficiency improvements, and farmer support aimed to improve food security and productivity) results in significantly higher social benefits with economic benefits that still reach $11.7 billion per year.

Management of sustainable investments: A comprehensive financial evaluation of wind energy facilities in Kastamonu

The rich renewable sources of nature, such as water, wind, solar, geothermal, and biomass, are converted into energy, revitalized into the economy without causing pollution, and ensure sustainability in energy management. Wind power plants have been among the most preferred renewable energy sources in recent years since they are harmless to the environment and easy to install in places with consistent and sufficient wind speed. This study focuses on conducting a feasibility analysis of a Wind Power Plant (WPP) in Kastamonu, a region known for its persistent wind patterns. The analysis aims to contribute to the existing literature by examining the potential of a WPP investment project within the region. Utilizing wind speed data collected from 23 observation stations for six years, starting from 2017 to 2022, a total of 1,200,600 h, a statistical evaluation method known as the Weibull probability density function is employed to indicate the wind energy potential. The parameters are determined by applying the maximum likelihood method. The findings indicate that it is feasible to establish Wind Energy Power Plants in specific locations, namely İnebolu, İnebolu Kar, Küre, and Tosya stations. The cost estimation for establishing a 10 MW power plant with three different turbine powers across these four locations ranges from 10 million USD to 20,8 million USD. Furthermore, the analysis indicates that the net profit for producing 1 kW of electrical energy falls from 9.39 to 50.65 USD. The projected payback period for the investment ranges from 2 to 25 years, depending on factors such as the exact site of the facility and the size of the turbines. Some investments are more feasible than others, with economic viability and potential return on investment varying significantly within the specified locations.

Enhancing Property Valuation in Post-War Recovery: Integrating War-Related Attributes into Real Estate Valuation Practices

In post-war environments, property valuation encounters obstacles stemming from widespread destruction, population displacement, and complex legal frameworks. This study addresses post-war property valuation by integrating war-related considerations into the ISO 19152 Land Administration Domain Model, resulting in a valuation information model for Syria’s post-war landscape, serving as a reference for property valuation in conflict-affected areas. Additionally, property valuation is enhanced through visualization modeling, aiding the comprehension of war-related attributes amidst and following conflict. We utilize data from a field survey of 243 Condominium Units in the Harasta district, Rural Damascus Governorate. These data were collected through quantitative interviews with real estate companies and residents to uncover facts about property prices and war-related conditions. Our quantitative data are analyzed using inferential statistics of mean housing prices to assess the impact of war-related variables on property values during both wartime and post-war periods. The analysis reveals significant fluctuations in prices during wartime, with severely damaged properties experiencing notable declines (about −75%), followed by moderately damaged properties (about −60%). In the post-war phase, rehabilitated properties demonstrate price improvements (1.8% to 22.5%), while others continue to depreciate (−55% to −65%). These insights inform post-war property valuation standards, facilitating sustainable investment during the post-war recovery phase.

Connectedness between Sustainable Investment Indexes: The QVAR Approach

We studied the relationship between sustainable investment indexes and examine whether this relationship varies in bullish, bearish, and stable financial markets. To understand this issue more deeply, we analyzed the connectedness between three indexes—the Sustainable Impact investments, Paris-aligned stocks, and green bonds indexes—using the daily closing prices from 1 June 2017 to 15 April 2024, encompassing 1793 observations. We used a quantile vector autoregressive (QVAR) model to understand the dynamic relationship among the considered indices. The findings indicate that sustainable investments are strongly interconnected in both high and low quantiles, but this connection weakens significantly during periods of market stability. The Sustainable Impact investments and Paris-aligned stocks indexes are net transmitters of impacts to other sustainable alternatives, while the green bonds index is a net receiver. We also observed an increase in interconnectedness across all quantiles during the pandemic, the Russia–Ukraine military conflict, and changes in the European Union and the United States’ monetary policies.