Integrating ESG Strategy into Socially Responsible Investment Decisions: A Literature Review
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Abstract
Conscious investors embrace investments with not just financial but also social and environmental benefits. Investment made with a positive and cautious approach considering financial and social benefits is termed as Socially Responsible Investment (SRI). The Environment, Social and Governance (ESG) factors seem to be significant criteria while making socially responsible investment decision by the investor as they believe that their investment has a potential to address environmental and social issues. Nations, businesses, and investors across the world promote SRI, to tackle global issues such climate change, food security, global health, by incorporating ESG practices and strategies. SRI gained substantial importance and momentum post 2008 financial crisis. The study analyses the significance of incorporating ESG variables into SRI investment decision of the investors and the effect of ESG strategies on financial performance of SRI portfolios. The study employs a comprehensive literature review based on research papers, articles, and reports, to evaluate the benefits and challenges associated with integration of ESG criteria into investment strategies. The study contributes to the existing literature on SRI and integration of ESG practices towards sustainable development and there by provides valuable suggestions to policymakers, financial institutions, and researchers.
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