Sustainable and responsible investment funds in Europe

Abstract

Purpose

The sustainable and responsible investing (SRI) is the part of sustainable investment which focusses on mutual funds. The purpose of this paper is to map and evaluate all the active European SRI funds, their performances and correlation with the national identity.

Design/methodology/approach

The sample of the research was analysed with descriptive statistics, mainly the frequency, the mean and the correlation analysis. A well-known volatility is represented by the synthetic risk and reward indicator (SRRI). Other two ratings are the environmental, social and governance (ESG) funds score distribution and the ESG funds letter rating distribution.

Findings

SRI investment may seem to be performing better than in the funds with a different focus. The segment of SRI funds will grow for the next decade.

Research limitations/implications

There is a lack of definitions and clear metrics for sustainable investing. For better performance, it would be also appropriate to examine each country separately.

Practical implications

This paper is part of the project targeting to design a model and methodology of SI evaluation taking into account ESG factors and risks, including profitability in a selected sector. This model can be used by investors for better decision-making.

Social implications

The paper focusses on the funds selecting investments that fulfil ESG criteria, which are part of the social responsibility and sustainability.

Originality/value

An analysis of the current approaches to evaluating investments shows that the key barrier in the transitions to sustainable investment is not taking into account the ESG factors. The research in this paper includes the ESG factors in the evaluation.

Citation

Sládková, J., Kolomazníková, D., Formánková, S., Trenz, O., Kolomazník, J. and Faldík, O. (2022), "Sustainable and responsible investment funds in Europe", Measuring Business Excellence, Vol. 26 No. 3, pp. 229-244. https://doi.org/10.1108/MBE-07-2019-0072