SUSTAINABLE INVESTING – GENESIS AND CONTEMPORARY DIMENSIONS

Abstract

Sustainable investing, also called socially responsible, is at the heart of the concept of sustainable finance. Some researchers trace its roots back to ancient times with the Bible and Qur'an's guidelines and rules for investing money and doing business. More recently, socially responsible investing is associated with the investment companies’ practice that emerged in the late XVIIIth and early XIXth century in applying religious and ethical principles in their investment policy to avoid investing in the so-called sin industries, such as the production of tobacco products, alcohol, gambling advertising, etc.
The rapid growth of socially responsible investing began in the 60s – 70s of the last century and is associated with social unrests against the Vietnam War, Apartheid in South Africa, gender inequality, etc. Initially, the investment community applied negative investment strategies, excluding from portfolio not only specific regions of the world, but also certain industries, such as arms production, nuclear energy, as well as companies that show discrimination based on genders and between ethnic groups, etc., but subsequently targeted industries and enterprises producing positive social and environmental effects. Legislative and regulatory initiatives, as well as the creation of international professional networks and associations, have a role to play in accelerating investor interest in this area.
The article aims to reveal the specific characteristics, role and current scales of socially responsible investing compared to traditional investing, which pursues primarily financial returns based on the risk taken.
In order to achieve the set goal, the author examines the reasons for the emergence and evolution of sustainable investing. Further, from contemporary positions, the individual strategies and specific techniques of sustainable or socially responsible investing are analysed. As there is often a mix between socially responsible investing, ESG investing and impact investing, the specifics between the different portfolio management approaches are clarified. Last but not least, the article analyses the interest of individual and institutional investors in the implementation of socially responsible strategies in the changing world.