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The Allocation of Socially Responsible Capital
Open accessAbstract
ABSTRACT Portfolio allocation decisions increasingly incorporate social values. We develop a tractable framework to study how competition between investors to own socially valuable assets affects social welfare. Relative to the most common social‐investing strategies, we identify alternative strategies that result in higher impact and higher financial returns. We identify strategies for investors to have impact when impact is difficult to measure. From the firm's perspective, increasing profitability can have greater impact than directly increasing social value. We present new empirical evidence on the social preferences of investors that demonstrates the practical relevance of our theory.
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Citations
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Oehmke, M., & Opp, M. M. (2020) · Social Science Research Network · doi:10.2139/ssrn.3467644 · Cited by 208
“Green and Roth (2021) confirm this prediction using an assignment matching model.”
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“Besides, impact investing may go beyond climate screening, for example, by favoring brown companies that are inclined to green up quickly or small green companies that would benefit from financial support to grow (Green and Roth, 2020; Heeb and K¨olbel, 2020).”
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“In Green and Roth (2021), responsible investors focus on projects that would not be financed otherwise, and in Oehmke and Opp (2020), they focus on increasing the equilibrium scale of clean production, taking into account the existence of other investors.”
Inderst, R., & Opp, M. M. (2025) · Journal of Financial Economics · doi:10.1016/j.jfineco.2024.103954 · Cited by 61
Gollier, C., & Pouget, S. (2022) · Economica · doi:10.1111/ecca.12436 · Cited by 62
“SR investors can achieve effective impact by investing in firms that produce positive societal impact and that would not have been financed by conventional investors, see Green and Roth (2020), or by imposing pollution constraints on the firms they can finance and focusing on firms that suffer most from financing cons…”
BackgroundInfluentialUnderstanding Markets with Socially Responsible ConsumersPreprint
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“…to understand this emerging space; Geczy et al. (2020) detail the contracting and governance practices of impact investing funds.7 On the theory side, Chowdhry et al. (2019), Oehmke and Opp (2020) and Green and Roth (2020) propose models for the existence and usefulness of impact investing.”
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Caldecott, B., Clark, A., Harnett, E., & Liu, F. (2024) · Review of World Economics · doi:10.1007/s10290-024-00541-9 · Cited by 25
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“(2001), and more recently, theoretically and empirically, in (Berk and van Binsbergen, 2021; Oehmke and Opp, 2022; Chowdhry et al., 2019; Landier and Lovo, 2020; Green and Roth, 2021).”
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“2See, for example, Brest and Born (2013), Brest, Gilson, and Wolfson (2016), Chowdhry, Davies, and Waters (2019), Landier and Lovo (2020), Green and Roth (2020), Hong, Wang, and Yang (2021), and Roth (2021).”
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Geelen, T., Hajda, J., & Starmans, J. (2026) · Journal of Financial Economics · doi:10.1016/j.jfineco.2026.104357 · Cited by 12
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Alex, F. (2026) · The North American Journal of Economics and Finance · doi:10.1016/j.najef.2026.102695
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Metadata
- Authors
- Green, D., & Roth, B.
- Affiliations
- Harvard University (US)
- University of Minnesota (US)
- Corresponding author
- Green, Daniel
- ORCID
- Roth, Benjamin
- Venue
- The Journal of Finance
- Publisher
- Elsevier BV
- Published
- 2020
- Volume
- 80
- Issue
- 2
- Pages
- 755-781
- ISSN
- 0022-1082 (ISSN-L)
- OpenAlex
- W4406710300
- Cited by
- 125
- References
- 0
- Citations by year
- 2026: 19 · 2025: 25 · 2024: 26 · 2023: 20 · 2022: 19 · 2021: 7 · 2020: 6
- FWCI
- 40.22
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- The Journal of Finance (publishedVersion)
- SSRN Electronic Journal (acceptedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Community Development and Social Impact
- 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
- Keywords
- socially responsible investment, asset allocation, social values, investor competition, social welfare (welfare economics), impact investing, firm profitability, financial returns
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