VGSF - WU Vienna - LC

Marcus Opp, Stockholm School of Economics

online via Zoom 11:00 - 12:15

Organizer VGSF

As part of the ser­ies of the "Fin­ance Re­search Sem­inar", VGSF wel­comes Mar­cus Opp from Stock­holm School of Eco­nom­ics to present his re­search pa­per.
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A The­ory of So­cially Re­spons­ible In­vest­ment

We char­ac­ter­ize ne­ces­sary con­di­tions for so­cially re­spons­ible in­vestors to im­pact firm be­ha­vior in a set­ting in which firm pro­duc­tion gen­er­ates so­cial costs and is sub­ject to fin­an­cing con­straints. Im­pact re­quires a broad man­date, in that so­cially re­spons­ible in­vestors need to in­tern­al­ize so­cial costs ir­re­spect­ive of whether they are in­vestors in a given firm. Im­pact is op­tim­ally achieved by en­abling a scale in­crease for clean pro­duc­tion. So­cially re­spons­ible and fin­an­cial in­vestors are com­ple­ment­ary: jointly they can achieve higher sur­plus than either in­vestor type alone. When so­cially re­spons­ible cap­ital is scarce, it should be al­loc­ated based on a so­cial prof­it­ab­il­ity in­dex (SPI). This mi­cro-­foun­ded ESG met­ric cap­tures not only a firm’s so­cial status quo but also the coun­ter­fac­tual so­cial costs pro­duced in the ab­sence of so­cially re­spons­ible in­vestors.

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