Do Investment Funds Care About the Environment? Evidence from Faith-based Funds

Abstract

Purpose: Ethical investing is considered to be the pinnacle of embedding environmental considerations in investing. Environmental considerations form a major part of corporate social responsibility (CSR), and CSR is considered to have a positive effect on investment returns. The purpose of this chapter is to assess the degree of environmental considerations embedded in faith-based funds investment criteria. The comparative analysis between principles and practice through faith-based investing is undertaken.

Design/Methodology: Prospectuses of selected faith-based mutual funds and other information around investment strategies provided on the Funds’ websites have been analyzed in detail. Content analysis has been undertaken in order to evaluate the existence and types of environmental related criteria demonstrated by the Funds. The criteria are compared to the faith principles on environmental responsibility.

Findings: It is generally assumed that CSR requirements form the premise of socially responsible investing. The authors find that faith-based investing criteria are narrowly defined and that they represent biases which do not promote environmentally responsible investing.

Implications: The major implication is that inspite of the availability of faith-based environmental responsibility principles, faith-based funds represent a case of economic returns prioritization over environmental considerations. Environment accountability principles that exist need to be promoted regularly so that they become an essential element of every day decision-making including faith-based economic decision-making.

Originality: This study contributes to the debate on ethical investing from the perspective of faith-based mutual funds.

Citation

Khan, T. and Ozili, P.K. (2021), "Do Investment Funds Care About the Environment? Evidence from Faith-based Funds", Özen, E., Grima, S. and Gonzi, R.D. (Ed.) New Challenges for Future Sustainability and Wellbeing (Emerald Studies in Finance, Insurance, and Risk Management), Emerald Publishing Limited, Leeds, pp. 341-362. https://doi.org/10.1108/978-1-80043-968-920211018