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Socially Responsible Investment and Market Performance: The Case of Energy and Resource Companies

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  • Janusz Brzeszczynski, Binam Ghimire, Tooraj Jamasb, and Graham McIntosh

Abstract

Do financial markets reward the energy and resource companies for adopting socially responsible practices? In this study, we investigate the stock market performance of major international energy and resource firms, classified within the socially responsible investment (SRI) category, from 2005 to 2016. We simulate investments in the portfolios of the SRI energy and resource companies stocks during this 11-year period and we further assess their risk-adjusted performance. The returns of the energy and resource SRI portfolio as a whole were neither consistently superior nor inferior to those of the benchmark indices. However, there exist substantial differences across the individual sub-sectors. The overall results show that markets do not reward or penalize the energy and resource firms for their SRI attitudes. We also find that the crude oil price consistently had a significant influence on the stock returns of the SRI energy and resource companies.

Suggested Citation

  • Janusz Brzeszczynski, Binam Ghimire, Tooraj Jamasb, and Graham McIntosh, 2019. "Socially Responsible Investment and Market Performance: The Case of Energy and Resource Companies," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    • Handle: RePEc:aen:journl:ej40-5-jamasb
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    1. Paul Lanoie, 2008. "When And Why Does It Pay To Be Green?," CIRANO Papers 2008n-02a, CIRANO.
    2. Stavros Degiannakis & George Filis & Renatas Kizys, 2014. "The Effects of Oil Price Shocks on Stock Market Volatility: Evidence from European Data," The Energy Journal, , vol. 35(1), pages 35-56, January.
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    2. Schabek, Tomasz, 2020. "The financial performance of sustainable power producers in emerging markets," Renewable Energy, Elsevier, vol. 160(C), pages 1408-1419.
    3. Li, Xuelian & Wu, Guanyang & Lin, Jyh-Horng, 2023. "Enhancing borrowing-firm equity through renewable energy adoption, consumer green awareness, and insurer sustainable finance," Energy Economics, Elsevier, vol. 126(C).
    4. Md Lutfur Rahman & Syed Jawad Hussain Shahzad & Gazi Salah Uddin & Anupam Dutta, 2022. "Comparing the Risk Spillover from Oil and Gas to Investment Grade and High-yield Bonds through Optimal Copulas," The Energy Journal, , vol. 43(1), pages 215-239, January.
    5. Ana Ivanisevic Hernaus & Davor Zoricic & Denis Dolinar, 2023. "How competitive is SRI in developing financial markets: The case of Central and Eastern Europe," E&M Economics and Management, Technical University of Liberec, Faculty of Economics, vol. 26(2), pages 172-188, June.
    6. Díaz, Antonio & Escribano, Ana, 2021. "Sustainability premium in energy bonds," Energy Economics, Elsevier, vol. 95(C).
    7. Yunguo Lu & Lin Zhang, 2023. "Environmental information disclosure and firm production: evidence from the estimated efficiency of publicly listed firms in China," Journal of Productivity Analysis, Springer, vol. 59(1), pages 99-119, February.
    8. Arif, Muhammad & Naeem, Muhammad Abubakr & Farid, Saqib & Nepal, Rabindra & Jamasb, Tooraj, 2022. "Diversifier or more? Hedge and safe haven properties of green bonds during COVID-19," Energy Policy, Elsevier, vol. 168(C).
    9. Imane El Ouadghiri & Mathieu Gomes & Jonathan Peillex & Guillaume Pijourlet, 2022. "Investor Attention to the Fossil Fuel Divestment Movement and Stock Returns," Post-Print hal-03549713, HAL.
    10. Brzeszczyński, Janusz & Gajdka, Jerzy & Pietraszewski, Piotr & Schabek, Tomasz, 2022. "Has the risk of socially responsible investments (SRI) companies stocks changed in the COVID-19 period? International evidence," Finance Research Letters, Elsevier, vol. 49(C).
    11. Hulshof, Daan & Mulder, Machiel, 2020. "The impact of renewable energy use on firm profit," Energy Economics, Elsevier, vol. 92(C).

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