Nadja Guenster

The Economic Value of Corporate Eco-Efficiency

This study adds new insights to the long-running corporate environmental-financial performance debate by focusing on the concept of eco-efficiency. Using a new database of eco-efficiency scores, we analyse the relation between eco-efficiency and financial performance from 1997 to 2004. We report that eco-efficiency relates positively to operating performance and market value. Moreover, our results suggest that the markets valuation of environmental performance has been time variant, which may indicate that the market incorporates environmental information with a drift. Although environmental leaders initially did not sell at a premium relative to laggards, the valuation differential increased significantly over time. Our results have implications for company managers, who evidently do not have to overcome a tradeoff between eco-efficiency and financial performance, and for investors, who can exploit environmental information for investment decisions.

Socially Responsible Investing: The Eco-Efficiency Premium Puzzle

There exists a widespread consensus among mainstream academics and investors that socially responsible investing (SRI) leads to inferior, rather than superior, portfolio performance. Using Innovests well-established corporate eco-efficiency scores, we provide evidence to the contrary. We compose two equity portfolios that differ in eco-efficiency characteristics and find that our high-ranked portfolio provided substantially higher average returns compared to its low-ranked counterpart over the period 1995-2003. Using a wide range of performance attribution techniques to address common methodological concerns, we show that this performance differential cannot be explained by differences in market sensitivity, investment style, or industry-specific components. We finally investigate whether this eco-efficiency premium puzzle withstands the inclusion of transaction costs scenarios, and evaluate how excess returns can be earned in a practical setting via a best-in-class stock selection strategy. The results remain significant under all levels of transactions costs, thus suggesting that the incremental benefits of SRI can be substantial.

Altruism versus Egoism in Investment Decisions

We provide survey evidence that personal values have an impact on individual investment decisions, in particular the decision to invest socially responsible. Our findings show that there is a positive link between altruistic values and the relative importance of social responsibility. This effect is stronger when individuals believe that they can make a positive social or environmental impact with their investments, or when they feel morally obliged to invest responsibly. If altruistic individuals associate responsible investments with higher returns, it decreases their motivation to invest responsibly. Egoistic values are negatively associated with the decision to invest responsibly, unless individuals associate responsible investing with higher returns.

Pedagogical methods for sustainable development: business educational projects generating direct impact on stakeholders through fundraising and fund management

Business Schools have faced the challenge of emphasising ethics and sustainability by developing students as professionals able to meet current sustainability needs. To date, there is limited practical guidance in the literature for faculty members who seek to implement projects that incorporate fundraising and fund management as educational approaches for sustainable development. Yet, these approaches are particularly relevant because projects that students will face later in their careers may commonly entail these skills. This paper provides three cases: one cross-disciplinary course project that incorporates fundraising and donation, one course project that results in donation to a non-profit organisation, and one program that emphasises sustainability-oriented fund management. These three cases represent active learning approaches that facilitate learning of Business disciplines while addressing ethical, social, and environmental issues. This paper provides practical guidance for faculty to implement projects that directly impact stakeholders through fundraising, donation, and fund management as methods supporting sustainable development.