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This Palgrave Pivot aims to build a bridge between corporate social responsibility (CSR) and sustainable finance in financial markets. It investigates classic CSR topics in the light of a modern conception of sustainability. The first part emphasizes four relevant topics in the CSR panorama of financial institutions: banks remuneration practices; human capital disclosure; the impact of environmental performance on banks, and finally, the institutional investors’ attitude towards socially responsible investments (SRIs). The second part explores CSR practices within the financial markets and discusses risk-return profiles of SRI and non-SRI indexes in different time frames. It investigates whether thematic social responsible funds obtain different risk-return than traditional funds, and finally, assesses whether equity crowdfunding could foster social innovation. This book is aimed at scholars and students who are interested in social impact investing and practitioners involved in the social impact market.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

The aim of this chapter is to introduce the aim and structure of the book. Specifically, the aim of the book is to build a bridge between corporate social responsibility (CSR) and sustainable finance in financial markets. Classic CSR topics have been investigated in the light of a modern conception of sustainability. The book is organized in two main blocks. The first block emphasizes four relevant topics in the CSR panorama of financial institutions: banks remuneration practices; human capital disclosure; the impact of environmental performance on banks, and finally, the institutional investors’ attitude towards socially responsible investments (SRIs). The second block looks to CSR practices within the financial markets and discusses risk-return profiles of SRI and non-SRI indexes in different time frames; it investigates whether thematic social responsible funds obtain different risk-return than traditional funds, and finally, assesses whether equity crowdfunding could foster social innovation.
Mario La Torre, Helen Chiappini

Chapter 2. “Responsible” Remuneration Policies in Banks: A Review of Best Practices in Europe

The inclusion of non-financial metrics in remuneration plans can help companies achieve sustainable business goals. Moreover, investors, by assessing the remuneration policies of companies, could be better able to identify worthy firms in the long-term interests of shareholders and society, enabling them to make more responsible investments. This work investigates the use of non-financial performance measures in executive compensation. A sample of globally, systemically important European banks are analysed over the period 2013–2016. A quantitative score is developed using the content analysis approach. The results show an increasing use of these metrics by banks. However, the approaches adopted are still very diversified and not uniform. The main contributions of this study are (i) a systematic review of the adoption of non-financial metrics in bank remuneration contracts; (ii) a comparison of best practices in Europe; and (iii) useful indications for top management and investors to promote the use and knowledge of these non-financial criteria.
Stefania Sylos Labini, Antonia Patrizia Iannuzzi, Elisabetta D’Apolito

Chapter 3. Intellectual Capital Disclosure: Evidence from the Italian Systemically Important Banks

The need to overcome the limitations connected with the traditional financial reporting has driven the development of intellectual capital (IC) and corporate social responsibility (CSR) disclosure. Such need has also highlighted the relevance of an integrated reporting, recently supported by the Directive 2014/95/EU, which makes mandatory the disclosure of non-financial information for large-sized enterprises. The chapter focusses on the disclosure of the IC issues provided by the Italian systemically important banks. To conduct our analysis, we defined a disclosure model for the IC issues and collected data from the reports available on the banks’ websites; we used a deductive content analysis, integrated by the Scott’s pi test in order to evaluate the inter-coder reliability. Our findings, accordingly to prior literature, point out an incomplete IC disclosure, meaning that banks should extend the level of reporting on IC issues, and particularly they should improve the presence of forward-looking information and the quantified terms of IC elements.
Giuliana Birindelli, Paola Ferretti, Helen Chiappini

Chapter 4. Assessing the Relationship Between Environmental Performance and Banks’ Performance: Preliminary Evidence

The question of whether it pays to be green has been addressed by many studies, but despite the growing number of works, the debate about the relationship between environmental performance, environmental disclosure, and banks’ performance is still unresolved, and mixed results have been found. This work explored the relationship between environmental disclosure, environmental performance, and financial performance by using a sample of 57 EU15 listed banks. Moreover, by applying the value relevance methodology, we analyzed the relationship between market values, environmental disclosure, and environmental performance. Our findings reveal strong evidence of the value relevance of environmental disclosure.
Rosella Carè, Antonio Fabio Forgione

Chapter 5. “Ready or Not, Here I Come, You Can’t Hide.” Are Italian Institutional Investors Ready for Responsible Investments?

Despite the number of studies showing the potential advantages of responsible investing, and the growing number of international investors interested in this type of assets, at the domestic level it is not clear yet whether Italian investors are ready for this switch. Thanks to the use of a proprietary database, collecting data about institutional investors, and two partnerships (with the Italian Association of Pension Funds—Assofondipensione, and the Italian Family Officers Association—AIFO), it has been possible to conduct a preliminary survey among major Italian institutional investors, potentially interested in responsible assets.
Duccio Martelli, Luca Testoni

Chapter 6. Sustainable and Responsible Investments: Same Sea, Different Fishes?

The current international economic scenario, long characterized by interest rates close to zero and a higher positive correlation between traditional investment solutions, has persuaded retail and professional investors to rethink their investment strategies and to consider alternative investment solutions. The appeal of specific investments, combining financial returns and social wellness, is increasing. Such a strategy, which seeks to achieve both goals, is generally called sustainable and responsible investing or socially responsible investment (SRI). This paper attempts to answer two research questions: (1) What are the SRI risk-return trade-offs over different time horizons? and (2) Is SRI able to meet investors’ needs, to reduce risk without a negative impact on returns? Preliminary results show that SRI is not completely different from the others investment opportunity, but in a portfolio view, SRI produces benefits for investors.
Alberto Burchi, Duccio Martelli, Paola Musile Tanzi

Chapter 7. A New Approach to Sustainable and Responsible Investment: The Sustainability-Themed Mutual Funds

This research analyzes the risk-adjusted returns and the investment style of sustainability-themed funds, a fast-growing category of sustainable and responsible mutual fund. Sustainability-themed funds are compared with sustainable and responsible mutual funds that implement different approaches in portfolio selection and management, and with thematic funds not involved in responsible investment strategies. The study uses a European sample of 1512 mutual funds where 468 are sustainability-themed funds, 633 are other sustainable and responsible funds, and 411 thematic funds. Monthly performance and fund characteristics are analyzed for the period 2007–2017 using a single factor Capital Asset Pricing Model (CAPM), a Fama and French (1993) 3-factor model, and, lastly, a Fama and French (Journal of Financial Economics, 116: 1–22, 2015) 5-factor model. The analysis is extremely innovative. During the last 15 years, literature about sustainable and responsible investment has focused on the differences in terms of risk and performance between socially responsible and conventional funds. Starting from the methodology applied in previous studies, and in light of their exponential growth in recent years, this paper focuses on sustainability-themed mutual funds. We demonstrate that sustainability-themed funds differ in terms of risk, performance, and investment style from other funds that implement social responsible strategies and from thematic funds focusing on a specific theme, but not responsible investment.
Federica Ielasi, Monica Rossolini

Chapter 8. Is Equity Crowdfunding a Good Tool for Social Enterprises?

Equity crowdfunding is an emerging financing tool that can help social start-ups and firms to collect people and resources around a project. This paper focuses on equity crowdfunding. We look at this as a complementary financing channel useful for promoting innovation and social change by cutting down the traditional features of financial investment. Our unique data set regards all the 104 Italian equity crowdfunding campaigns, launched by different platforms on the Italian equity crowdfunding market from 2013 to 2017. Our aim is twofold: (a) to describe the characteristics of the social firms which have had resource to equity crowdfunding and (b) with a logit model, to investigate which factors influence the success of the campaign, in particular by the social orientation of the issuers. The results suggest that social firms’ investment offerings are not different from those of non-social ones, but so far, the Italian equity crowdfunding market does not seem suitable for supporting the financial needs of this type of firms, on the side of either investors or firms.
Stefano Cosma, Alessandro Giovanni Grasso, Francesco Pagliacci, Alessia Pedrazzoli

Backmatter

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