Socially and Environmentally Responsible Investments and Mutual Funds

Abstract

The adoption of environmental, social, and governance (ESG) criteria has gained major interest among academics and practitioners for decision-making in banking, corporate finance, and investment appraisal. This chapter focuses on the incorporation of ESG factors in the context of designing and implementing socially and environmental fund management investment strategies (SRI). The principles of SRI and ESG are outlined, followed by an overview of their historical development, and the development of a list of various ESG criteria. Finally, an overview of the recent literature is presented, focusing on studies that examine the characteristics of socially responsible mutual funds and their performance, as well as behavioral and portfolio optimization issues.