Doing well by doing good with the performance of United Nations Global Compact Climate Change Champions
Open accessAbstract
Abstract Are Climate Change Champions favorable to investors? This is the first study of portfolio performance of a fourth generation SRI screening strategy based on United Nations Global Compact firms who are Climate Change Champions. The operational changes made by UNGC firms are real and disproves the notion that UNGC firms are merely green-washing. We find that after firms join UNGC, there is a positive effect on long term portfolio performance. UNGC firms have lower volatility and so less risk than their competitors. We find an apparent mispricing of lower risk in market returns as standard asset pricing models may not be pricing investors’ aversion to climate change risk and preference for firms actively combating climate change. This lends support to Fama and Frenchs’ theory that says that these “tastes” are valid factors to provide a more complete asset pricing model. Our study encourages investment in UNGC-CCC firms as we find there is no underperformance penalty against a conventional portfolio because the lower return reflects lower risk. Thus, our evidence suggests that “doing good for society is also good for business.”
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Recent data suggest that the world economy is on track to an income reduction of 11-29% by 2050.
“Recent data suggest that the world economy is on track to an income reduction of 11–29% by 2050, threatening the social and economic systems on which human health and wellbeing often depend.296,297”
From The 2024 report of the Lancet Countdown on health and climate change: facing record-breaking threats from delayed action (2024) · cites this paper as [296]
Years of delay in delivering the $100 billion promised annually to support the most vulnerable countries in a just transition have hampered progress and further exacerbated global inequities.
“Years of delay in delivering the $100 billion promised annually to support the most vulnerable countries in a just transition have hampered progress and further exacerbated global inequities.296”
From The 2024 report of the Lancet Countdown on health and climate change: facing record-breaking threats from delayed action (2024) · cites this paper as [296]
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- Authors
- Msiska, M., Ng, A., & Kimmel, R. K.
- Affiliations
- Eden University (ZM)
- Beijing Normal-Hong Kong Baptist University (CN)
- Thompson Rivers University (CA)
- Corresponding author
- Ng, Alex
- Venue
- Humanities and Social Sciences Communications
- Published
- 2021-12-10
- Volume
- 8
- Issue
- 1
- ISSN
- 2055-1045 (ISSN-L)
- 2662-9992
- OpenAlex
- W4200147157
- Cited by
- 10
- References
- 33
- Citations by year
- 2024: 6 · 2023: 3 · 2022: 1
- FWCI
- 2.23
- Type
- journal article
- Language
- en
- Update notices
- correction (2022-01-14)
- Open access
- gold
- doi.org
- Locations
- Humanities and Social Sciences Communications (publishedVersion, cc-by)
- RePEc: Research Papers in Economics (submittedVersion)
- DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion, cc-by-sa)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Social Responsibility Reporting
- Social Sciences › Economics, Econometrics and Finance › Finance › Sustainable Finance and Green Bonds
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Keywords
- UN Global Compact, socially responsible investment, portfolio performance, greenwashing, climate risk, asset pricing, risk aversion, firm volatility, investor preferences
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