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9. ESG Investing and Firm Efficiency: The Costs and Benefits of SRI Efficiency Screening

  • 2024
  • OriginalPaper
  • Chapter
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Abstract

The chapter delves into the growing trend of socially responsible investing (SRI) and its impact on portfolio performance. It examines the costs and benefits of SRI efficiency screening, focusing on the joint consideration of financial and ESG criteria. The study uses multi-directional efficiency analysis to evaluate the relative efficiencies of US and European firms, and investigates the effects of screening intensity on financial and sustainability performance across various asset allocation strategies. The findings suggest that while mean-variance optimization shows a negative screening effect, naive and value-weighted strategies demonstrate significant improvements in financial and ESG performance. The research also highlights the importance of considering transaction costs when determining the optimal screening intensity. This thorough analysis offers valuable insights for both SRI fund managers and conventional investors seeking to enhance their portfolio's sustainability and financial performance.

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Title
ESG Investing and Firm Efficiency: The Costs and Benefits of SRI Efficiency Screening
Author
Karl Weinmayer
Copyright Year
2024
DOI
https://doi.org/10.1007/978-3-031-55505-3_9
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