A Theory of Socially Responsible Investment

• 成果类型: Article
• 署名作者: Oehmke, Martin; Opp, Marcus M.
• 署名单位: University of London; London School Economics & Political Science; Centre for Economic Policy Research - UK; Stockholm School of Economics
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdae048
• 发表日期: 2024
• 页码: 1193-1225
• 关键词: externalities; provision

摘要

We characterize the conditions under which a socially responsible (SR) fund induces firms to reduce externalities, even when profit-seeking capital is in perfectly elastic supply. Such impact requires that the SR fund's mandate permits the fund to trade off financial performance against reductions in social costs-relative to the counterfactual in which the fund does not invest in a given firm. Based on such an impact mandate, we derive the social profitability index, an investment criterion that characterizes the optimal ranking of impact investments when SR capital is scarce. If firms face binding financial constraints, the optimal way to achieve impact is by enabling a scale increase for clean production. In this case, SR and profit-seeking capital are complementary: Surplus is higher when both investor types are present.