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.
KeywordsSocially responsible investment (SRI) Risk-Return trade-off Portfolio optimization
The Authors benefited from the many fruitful discussions with prof. Marco Nicolosi (University of Perugia, Italy), the discussion at the “Social Impact Investments International Conference”, organized by Sapienza University of Rome (Italy) on October 12, 2017, the suggestions from the anonymous reviewers and prof. Mario La Torre (Sapienza University, Rome). The views expressed are entirely personal and any remaining errors are solely the authors’ responsibility. The research is part of the project “Impact analysis of socially responsible investments on systemic risk” (code 2017.0226.021) funded by Fondazione Cassa di Risparmio di Perugia.
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