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What drives socially responsible investment? The case of the Netherlands

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  • Bert Scholtens

    (University of Groningen, The Netherlands)

Abstract

This paper asks what determines the growth of socially responsible savings and investments in the Netherlands. We find that special tax regulation can be held responsible for more than half of the growth in socially responsible savings and investments during the period 1995-2001. It has resulted in socially and environmentally worthwhile projects that would otherwise not have had access to finance. Furthermore, it appears that investors in the Netherlands are sensitive to changes in the underlying regulation. However, an important fraction of the investors is likely to keep their investments if the favourable tax treatment were to be abandoned. This paper also investigates the financial performance of socially responsible savings and investments. We find that the investments earn returns that do not significantly differ from the return on their benchmarks. The risk, however, is significantly above that of the benchmark. In contrast, socially responsible savings earn a higher (after-tax) return and have equal risk in comparison with ordinary savings. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.

Suggested Citation

  • Bert Scholtens, 2005. "What drives socially responsible investment? The case of the Netherlands," Sustainable Development, John Wiley & Sons, Ltd., vol. 13(2), pages 129-137.
    • Handle: RePEc:wly:sustdv:v:13:y:2005:i:2:p:129-137
    DOI: 10.1002/sd.252
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    References listed on IDEAS

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    1. Chami, Ralph & Cosimano, Thomas F. & Fullenkamp, Connel, 2002. "Managing ethical risk: How investing in ethics adds value," Journal of Banking & Finance, Elsevier, vol. 26(9), pages 1697-1718, September.
    2. Scholtens, Bert, 2001. "Borrowing green: economic and environmental effects of green fiscal policy in The Netherlands," Ecological Economics, Elsevier, vol. 39(3), pages 425-435, December.
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    Cited by:

    1. Andreas G. F. Hoepner & Arleta A. A. Majoch & Xiao Y. Zhou, 2021. "Does an Asset Owner’s Institutional Setting Influence Its Decision to Sign the Principles for Responsible Investment?," Journal of Business Ethics, Springer, vol. 168(2), pages 389-414, January.
    2. Nadine Strauß, 2021. "Communicating Sustainable Responsible Investments as Financial Advisors: Engaging Private Investors with Strategic Communication," Sustainability, MDPI, vol. 13(6), pages 1-18, March.
    3. Tim Benijts, 2014. "A Business Sustainability Model for Government Corporations. A Belgian Case Study," Business Strategy and the Environment, Wiley Blackwell, vol. 23(3), pages 204-216, March.
    4. Riikka Sievänen & Hannu Rita & Bert Scholtens, 2013. "The Drivers of Responsible Investment: The Case of European Pension Funds," Journal of Business Ethics, Springer, vol. 117(1), pages 137-151, September.
    5. Gerd Scholl & Frieder Rubik & Harri Kalimo & Katja Biedenkopf & Ólöf Söebech, 2010. "Policies to promote sustainable consumption: Innovative approaches in Europe," Natural Resources Forum, Blackwell Publishing, vol. 34(1), pages 39-50, February.
    6. Monk, Alexander & Perkins, Richard, 2020. "What explains the emergence and diffusion of green bonds?," Energy Policy, Elsevier, vol. 145(C).
    7. Benjamin Richardson, 2009. "Keeping Ethical Investment Ethical: Regulatory Issues for Investing for Sustainability," Journal of Business Ethics, Springer, vol. 87(4), pages 555-572, July.
    8. van Dooren, Bono & Galema, Rients, 2018. "Socially responsible investors and the disposition effect," Journal of Behavioral and Experimental Finance, Elsevier, vol. 17(C), pages 42-52.
    9. Tim Benijts, 2009. "Sustainable investment funds and the government: a comparative study on public policies in the Netherlands and Belgium," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 11(6), pages 1155-1174, December.
    10. Bert Scholtens, 2006. "Finance as a Driver of Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 68(1), pages 19-33, September.

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