ESG投資在全球經(jīng)濟(jì)中的重要性

SPRINGERBRIEFSINECONOMICS

KOBEUNIVERSITYSOCIALSCIENCERESEARCHSERIES

TadahiroNakajima·

ShigeyukiHamori·XieHe·

GuizhouLiu·WentingZhang·YulianZhang·TiantianLiu

ESG

InvestmentintheGlobalEconomy

KOBE

UNivERsiTY

SpringerBriefsinEconomics

KobeUniversitySocialScienceResearchSeries

SeriesEditors

YunfangHu,KobeUniversityGraduateSchoolofEconomics,Kobe,Japan

ShigeyukiHamori,KobeUniversityGraduateSchoolofEconomics,Kobe,Japan

EditorialBoard

MasahiroEnomoto,KobeUniversityRIEB,Kobe,Japan

YoshihideFujioka,KobeUniversityGraduateSchoolofEconomics,Kobe,Japan

YukaKaneko,KobeUniversityGraduateSchoolofInternationalCooperationStudies,Kobe,Japan

KazumiSuzuki,KobeUniversityGraduateSchoolofBusinessAdministration,Kobe,Japan

KenjiYamamoto,KobeUniversityGraduateSchoolofLaw,Kobe,Japan

TheKobeUniversitySocialScienceResearchSerieshasbeenestablishedasasubseriesoftheSpringerBriefinEconomicsSeries,butinfactthisexcitinginterdisciplinarycollectionencompassesscholarlyresearchnotonlyintheeconomicsbutalsoinlaw,politicalscience,businessandmanagement,accounting,internationalrelations,andothersubdisciplineswithinthesocialsciences.Asanationaluniversitywithaspecialstrengthinthesocialsciences,KobeUniversityactivelypromotesinterdisciplinaryresearch.ThisseriesisnotlimitedonlytoresearchemergingfromKobeUniversity’sfacultiesofsocialsciencesbutalsowelcomescross-disciplinaryresearchthatintegratesstudiesintheartsandsciences.

KobeUniversity,foundedin1902,isthesecondoldestnationalhighereducationinstitutionforcommerceinJapanandisnowapreeminentinstitutionforsocialscienceresearchandeducationinthecountry.Currently,thesocialsciencessectionincludesfourfaculties—Law,Economics,BusinessAdministration,andInternationalCooperationStudies—andtheResearchInstituteforEconomicsandBusinessAdministration(RIEB).Therearesome230-plusresearcherswhobelongtothesefacultiesandconductjointresearchthroughtheCenterforSocialSystemsInnovationandtheOrganizationforAdvancedandIntegratedResearch,KobeUniversity.ThisbookseriescomprisesacademicworksbyresearchersinthesocialsciencesatKobeUniversityaswellastheircollaboratorsataf?liatedinstitutions,KobeUniversityalumniandtheircolleagues,andrenownedscholarsfromaroundtheworldwhohaveworkedwithacademicstaffatKobeUniversity.AlthoughtraditionallytheresearchofJapanesescholarshasbeenpublicizedmainlyintheJapaneselanguage,KobeUniversitystrivestopromotepublicationanddissemi-nationofworksinEnglishinordertofurthercontributetotheglobalacademiccommunity.

Moreinformationaboutthissubseriesat

/series/15423

TadahiroNakajima?ShigeyukiHamori?XieHe?GuizhouLiu?WentingZhang?YulianZhang?TiantianLiu

ESGInvestmentintheGlobalEconomy

1灬

TadahiroNakajimaTheKansaiElectric

PowerCompany,IncorporatedOsaka,Japan

XieHe

GraduateSchoolofEconomics

KobeUniversityKobe,Japan

WentingZhang

GraduateSchoolofEconomics

KobeUniversityKobe,Japan

ShigeyukiHamori

GraduateSchoolofEconomics

KobeUniversityKobe,Japan

GuizhouLiu

BeijingDajiaInternetInformationTechnologyCo.,Ltd.

Beijing,China

YulianZhang

GraduateSchoolofEconomics

KobeUniversityKobe,Japan

TiantianLiu

GraduateSchoolofEconomics

KobeUniversityKobe,Japan

ISSN2191-5504ISSN2191-5512(electronic)SpringerBriefsinEconomics

ISSN2520-1697ISSN2520-1700(electronic)KobeUniversitySocialScienceResearchSeries

ISBN978-981-16-2992-1ISBN978-981-16-2990-7(eBook)

/10.1007/978-981-16-2990-7

?TheAuthor(s),underexclusivelicensetoSpringerNatureSingaporePteLtd.2021

Thisworkissubjecttocopyright.AllrightsaresolelyandexclusivelylicensedbythePublisher,whetherthewholeorpartofthematerialisconcerned,speci?callytherightsoftranslation,reprinting,reuseofillustrations,recitation,broadcasting,reproductiononmicro?lmsorinanyotherphysicalway,andtransmissionorinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilarmethodologynowknownorhereafterdeveloped.

Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthispublicationdoesnotimply,evenintheabsenceofaspeci?cstatement,thatsuchnamesareexemptfromtherelevantprotectivelawsandregulationsandthereforefreeforgeneraluse.

Thepublisher,theauthorsandtheeditorsaresafetoassumethattheadviceandinformationinthisbookarebelievedtobetrueandaccurateatthedateofpublication.Neitherthepublishernortheauthorsortheeditorsgiveawarranty,expressedorimplied,withrespecttothematerialcontainedhereinorforanyerrorsoromissionsthatmayhavebeenmade.Thepublisherremainsneutralwithregardtojurisdictionalclaimsinpublishedmapsandinstitutionalaf?liations.

ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSingaporePteLtd.

Theregisteredcompanyaddressis:152BeachRoad,#21-01/04GatewayEast,Singapore189721,Singapore

v

Contents

1

ESGInvestment

1

TadahiroNakajima

1.1

Introduction

1

1.2

History

2

1.3

ActivitiesandStrategies

4

1.4

CorporateDevelopmentandExpansionofItsStakeholders

7

1.5

Future

10

1.6

MarketEf?ciency

11

1.7

Anomalies

13

1.8

LimitsoftheMPT

15

1.9

GuidetoEmpiricalAnalysis

17

References

18

2

DoesESGIndexHaveStrongConditionalCorrelations

withSustainabilityRelatedStockIndices?

21

WentingZhang,TadahiroNakajima,andShigeyukiHamori

2.1

Introduction

21

2.2

EmpiricalTechniques

24

2.3

DataandSummaryStatistics

26

2.4

EmpiricalResults

29

2.4.1

AR-EGARCHSpeci?cation

29

2.4.2

A-DCCModel

31

2.4.3

AR(1)ModelfortheEstimatedDCCwithDummy

Variables

33

2.5

Conclusion

34

References

35

viContents

3

MeasuringTailDependenciesBetweenESGandRenewable

EnergyStocks:ACopulaApproach

37

XieHe,GuizhouLiu,andShigeyukiHamori

3.1

Introduction

37

3.2

EmpiricalTechniques

38

3.2.1

Copula

38

3.2.2

Time-VaryingCopula

39

3.2.3

MarginalDensity

41

3.3

DataandSummaryStatistics

42

3.4

EmpiricalResults

44

3.5

PortfolioPerformance

46

3.6

Conclusion

51

References

52

4

WhichFactorsWillAffecttheESGIndexintheUSAandEurope:

Stock,CrudeOil,orGold?

53

TiantianLiu,TadahiroNakajima,andShigeyukiHamori

4.1

Introduction

53

4.2

EmpiricalTechniques

55

4.2.1

MeasuresoftheDirectionalSpilloverEffects

intheTimeDomain

55

4.2.2

MeasuresoftheDirectionalSpilloverEffects

intheFrequencyDomain

56

4.3

DataandSummaryStatistics

57

4.4

EmpiricalResults

60

4.4.1

AnalysisofFull-SampleSpilloverEffects

61

4.4.2

AnalysisofTime-VaryingSpilloverEffects

64

4.5

Conclusion

69

References

70

5

HowDoestheEnvironmental,Social,andGovernanceIndex

ImpactstheFinancialMarketandMacro-Economy?

71

YulianZhang,TadahiroNakajima,andShigeyukiHamori

5.1

Introduction

71

5.2

EmpiricalTechniques

73

5.2.1

DY12

73

5.2.2

BK18

74

5.3

DataandSummaryStatistics

76

5.4

EmpiricalResults

79

5.4.1

FullSampleAnalysis

79

5.4.2

Rolling-WindowAnalysis

89

5.5

Conclusion

91

Appendix

92

References

100

Index

101

checkforupdates

Chapter1

ESGInvestment

TadahiroNakajima

1.1Introduction

ESGintegratesthethreefactorsofenvironment,social,andgovernance.Acompany’scommitmenttoESGissuesrepresentsitssustainability;however,itisnotdirectlyre?ectedinits?nancialinformation.Intraditionalinvestment,weuseindicatorsbasedon?nancialinformationsuchaspricebook-valueratio(PBR),price-earningsratio(PER),returnonequity(ROE),andexpectedfuturecash?ows,asoneoftheinvestmentcriteria.Ontheotherhand,inESGinvestment,wemustsuf?cientlyre?ectthecompany’seffortsonESGissues,whichcomprisenon-?nancialinformation,inourinvestmentdecisions.Recently,wehavewidelyacceptedthephilosophythatacompany’sESGeffortsareessentialforitslong-termgrowth;therefore,manycompaniesproactivelydisseminateinformationontheirvariousapproachestoESGissuesthroughtheirannualreports,integratedreports,corporatesocialresponsibilityreports,environmentalreports,sustainabilityreports,andtheirwebsites.ThefollowingareexamplesofESGissues:

Environment:climatechange,greenhousegasemissions,airpollution,resourceef?ciency,biodiversity,toxicemissionsandwaste,cleantechnology

Social:humanrights,labormanagement,healthandsafety,humandiversity,humancapitaldevelopment,relationshipwiththelocalcommunity,productliabilityGovernance:Corporategovernance,compliance,corruption,boarddiversity,ownership,executivepay,taxtransparency,riskmanagement.

SinceESGinvestmentisexpectedtoplayasocialrole,itcanbede?nedasasociallyresponsibleinvestment(SRI).Inotherwords,ESGinvestmentisaimedatboth?nancialandsocialreturns.Thissocialreturnisadecisivedifferencefromtraditionalinvestments.

1

?TheAuthor(s),underexclusivelicensetoSpringerNatureSingaporePteLtd.2021T.Nakajimaetal.,ESGInvestmentintheGlobalEconomy,KobeUniversitySocialScienceResearchSeries

/10.1007/978-981-16-2990-7_1

2

1ESGInvestment

Tofocusoninvestmentperformance,suchaspro?tabilityimprovementandriskreductionbyESGinvestment,thisbookdiscussesthebackgroundofESGinvestmentandpresentafewempiricalanalysesofESGinvestmentcasesafterintroducingthemethodsadopted.

1.2History

SincetheemergenceofSRIintheearlytwentiethcentury,ethicalinvestmentwithafocusonsocialissueshasbeengraduallyspreadbyinvestorswhovaluesocialreturns.Then,in2000,theinstitutionalpositioningofESGinvestmentbecameclearer.In2006,thePrinciplesforResponsibleInvestment(PRI)werelaunchedattheNewYorkStockExchange(NYSE),basedonthenotionthattheperformanceofinvestmentportfolioscanbeaffectedbyESGissues.Sincethen,ESGinvestmenthasbecomethefocusofattentionintermsof?nancialreturns,andinstitutionalinvestorshavebeenexpandingtheirparticipationinESGinvestments.AmoredetailedhistoryofESGinvestmentisintroducedinthenextparagraph.

Duringthe1920s,amutualfundwhichexcludedstocksofcompaniesinvolvedincertainindustries(e.g.,alcohol,gambling,tobacco)fromitsportfolioas“sinstock,”wasestablishedintheUnitedStates.Thiswasjustanethicalinvestmentinthesenseofaddressingsocialissues.However,thisinvestmentmethodcanbeinterpretedas“Negative/exclusionaryscreening,”oneoftheESGinvestmentmethodsdescribedbelow.Priortothis,theQuakerappliedsocialstandardstotheirinvestmentstandardsinseventeenthcenturyEngland.However,itwasnotapublicofferingforfundsfromgeneralinvestors.

Duringthe1960sand1970s,changesinthevaluesofcivilsocietybecamevisibleintheUS,suchastheAfricanAmericanCivilRightsMovementandtheoppositiontotheVietnamWar.Inthiscontext,economicactivitieshavealsoplacedimportanceonsocialissues,andSRIandshareholderproposalsthatprioritizesocialethicshavecometotheforefront.ItwasaroundthistimethattheinvestmentfundsthatexcludedstocksofcompaniesinvolvedintheVietnamWarfromtheirportfolioandthosethatconsistedofstocksofexcellentcompaniesinenvironmentalpro-tectionactivitiesand/orcompanieswithrespecttohumanrightsemerged.

Sincethen,socialmovementshavehadanincreasingimpactoneconomicactivity.Thenon-investmentmovementintheRepublicofSouthAfrica,whichbecamepopularintheUSduringthe1970sand1980s,mighthavecontributedtotheendoftheapartheid.Onthecontrary,inEurope,thephilosophyofSRI,whichemphasizesfollowingsocialmoralsforinvestmentactivities,hasgraduallyspreadtocharities,educationalinstitutions,andindividuals,sincechurchfundshavetra-ditionallybeenmanagedonthebasisofreligiousethics.However,themainpur-poseofSRIforinvestorswasnottoobtain?nancialreturnsbuttocontributetoreducingexternalcostsandincreasingexternalpro?ts,motivatedbyreligiousethicsandsocialmovements.Inotherwords,itcanberegardedasasocialmovementbyshareholders.

1.2History3

Inthe1990s,theglobalizationoftheeconomyacceleratedduetothemarketeconomytriggeredbythedisappearanceoftheSovietUnion,theriseofhugemultinationalcompanies,andtherapidgrowthofemergingcountries.In1992,Agenda21,anactionplanthatcountriesandrelevantinternationalorganizationsexecutetoachieve“sustainabledevelopment”inthetwenty-?rstcentury,wasadoptedattheEarthSummitheldbytheUnitedNations(UN)inRiodeJaneiro,Brazil.In1994,JohnBrettElkington,aworldauthorityoncorporateresponsibilityandsustainabledevelopment,proposeda“triplebottomline”thatevaluatestheperformanceofcorporateactivitiesonthreeaxes:economic,environmental,andsocial.Aroundthistime,theconceptofcorporatesocialresponsibility(CSR)becamegeneralizedworldwide,andasaresult,boycottcampaignswerecarriedouttopromptglobalcompaniestocorrectsocialproblems(e.g.,childlabor,forcedlabor,longworkinghours,lowwagelabor,sexualharassment)occurringinoverseassubcontractorfactories.Asaresult,manyinvestorsthinkthatacorpora-tion’sCSRassessment,whichisnon-?nancialinformation,shouldbeincorporatedintotheirinvestmentdecisionstosecurelong-termpro?ts.However,itwasarguedthatSRImaybreachthe?duciarydutybecauseofthepotentiallossofpro?tability,andithasbeenintenselydebated.

Inmanagingpensionfunds,whiletheEmployeeRetirementIncomeSecurityAct(ERISA)stipulatesthatinvestmentreturnsshouldbemaximizedandtheriskofsigni?cantlargelossesshouldbeminimized,theUSDepartmentofLaborexpressedtheviewthatconsideringtheotherfactors,pro?tabilitywouldnotberegardedasa?duciarydutybreachin1998.Thisso-calledCalvertLetter,whichcanbeinterpretedasallowingtrusteestoconsiderESGfactorsaslongasthesedonotnegativelyaffectportfolioperformanceintermsofreturns,risk,liquidity,anddiversi?cation,pavedthewayforESGinvestmentincorporatepensionfundsintheUS.IntheUnitedKingdom(UK),thePensionAct1995andotherrelatedregu-lationsrequirepensionfundstoincludetheirinvestmentpoliciesintheirannualreports.Moreover,therevisedAct,whichcameintoeffectin2000,hasmandatedthattrusteesshoulddocumentanddisclosenotonlytheirportfoliocomposition,itsrisks,andtheirexpectedreturns,butalsotheirinvestmentpolicies,includingthefactor,whethertoconsidersocial,environmental,andethicalmatterswhenbuying,holding,orsellingsecuritiesandtheexerciseofvotingrightsattachedtoinvest-ments,ifany.ThisregulationhasallowedESGinvestmentinthemanagementofpensionfunds,althoughitdoesnotproactivelyencourageESGinvestment.Sincethen,theintroductionofasystemsimilartothatintheUKinotherEuropeancountrieshasledtotheexpansionofESGinvestments.

In2006,theUNadvocatedthePRI,whichdirectlyreferredtoESGinvestment,tothe?nancialindustry,andthelaunchingceremonywasheldattheNYSE,attendedbythe7thUNSecretary-GeneralKo?Annan.ThePRIarevoluntaryprinciples(i.e.,notlegallybinding),buttheyarealsoguidelinesforESGinvest-mentforinstitutionalinvestorsnottobreach?duciaryduty.ThePRIconsistofsixsteps:

41ESGInvestment

1.WewillincorporateESGissuesintoinvestmentanalysisanddecision-makingprocesses.

2.WewillbeactiveownersandincorporateESGissuesintoourownershippoliciesandpractices.

3.WewillseekappropriatedisclosureonESGissuesbytheentitiesinwhichweinvest.

4.WewillpromoteacceptanceandimplementationofthePrincipleswithintheinvestmentindustry.

5.WewillworktogethertoenhanceoureffectivenessinimplementingthePrinciples.

6.WewilleachreportonouractivitiesandprogresstowardsimplementingthePrinciples.

Moreover,thePRIstatethattheperformanceofinvestmentportfolioscanbeaffectedbyESGissuesandthatinstitutionalinvestorsareobligatedtopursuethemostdesiredlong-terminterestsbytheirbene?ciaries.Inotherwords,itcanbeinferredthatinvestorsshouldincorporatetheeffectsofESGissuesonlong-termcorporatevalueintotheirinvestmentstrategies.ThisindicatesthattheESGinvestmentsystematizedbythePRIcanberegardedasaninvestmentmethodthatpursuespro?ts.Inthisrespect,ESGinvestmentisdistinctlydifferentfromthepreviousSRI,whosemainpurposeissocialmovement.TheframeworkofESGinvestmentconvertedthecompanies’responsetoESGissuesinbecominganinternaleconomyintheformofsecuringlong-termpro?ts.ThePRIhavecontinuedtogrowconsistentlysincetheirinceptionin2006.FromMarch302006toMarch30,2020,thenumberofsignatoriesincreasedfrom63to3038,andtheassetsundermanagementincreasedfrom6.5trillionUSDto103.4trillionUSD.

1.3ActivitiesandStrategies

TheGlobalSustainableInvestmentAlliance(GSIA)consistsofsevenESGinvestmentassociationsintheUS,Canada,Europe,theUK,theNetherlands,Australia,andJapan,andprovidesvariousdataonESGinvestmentthroughthe“GlobalSustainableInvestmentReview”issuedonceeverytwoyears.Inthissection,alldatasetsonsustainableinvestmentarecitedfromtheGSIA(2019).

Tables

1.1

,

1.2

,and

1.3

showtheESGinvestmentbyregionin2018,thetransitionofESGinvestmentbyregionfrom2016to2018,andtheratioofESGinvestmenttototalinvestmentbyregionin2016and2018,respectively.Europe,whichhasledtheworld’sESGinvestment,wasthetopleaderin2018,accountingfor45.9%ofthetotal.From2016to2018,theinvestmentgrewby11.4%,butthiswasonlyduetotheincreaseintotalinvestmentinEurope.TheratioofESGinvestmenttototalinvestmentwasalreadysaturated,fallingbelow50%in2018. ESGinvestmentintheUSandCanadahasgrownsteadilyoverthelastfewyears.Asaresult,in2018,theinvestmentinNorthAmericawas13,694billionUS

1.3ActivitiesandStrategies5Table1.1Sustainableinvestmentassets(2018)

Region

Amount[inbillionsofUSdollars]

Compositionratio[%]

Europe

14,075

45.9

UnitedStates

11,995

39.1

Japan

2180

7.1

Canada

1699

5.5

Australia/NewZealand

734

2.4

Total

30,683

100

Table1.3Ratioof

sustainableinvestmentassetstototalinvestmentassets

(2016and2018)

Table1.2Growthofsustainableinvestmentassets(2016to2018)

Region

2016

2018

Growth[%]

Europe[inbillionsofeuros]

11,045

12,306

11.4

UnitedStates[inbillionsofUSdollars]

8723

11,995

37.5

Japan[inbillionsofJapaneseyen]

57,056

231,952

306.5

Canada[inbillionsofCanadiandollars]

1505

2132

41.7

Australia/NewZealand[inbillionsofAustraliandollars]

707

1033

46.1

Region

2016[%]

2018[%]

Europe

52.6

48.8

UnitedStates

21.6

25.7

Japan

3.4

18.3

Canada

37.8

50.6

Australia/NewZealand

50.6

63.2

dollars,whichisnowveryclosetothatofEurope,accountingfor44.6%ofthatofthewholeworld.Furthermore,ESGinvestmentinNorthAmericacanbeexpectedtoexpandfurther,becausetheratioofESGinvestmenttototalinvestmentintheUSwasonly25.7%,whileinCanada,itreached50.6%.

JapanwasbehindothermajorcountriesinESGinvestments.However,theGovernmentPensionInvestmentFund(GPIF),theworld’slargestpensionfund,signedthePRIin2015.Since2017,whenGPIFstartedESGinvestment,Japan’sESGinvestmenthasbeeninfullswing.AlthoughESGinvestmentinJapanhasgrownrapidlyover300%inthepasttwoyears,theamountwaslessthan20%ofthatofthewholecountryin2018.Therefore,futuredeploymentisexpected,whileJapan’sESGinvestmentwasonly7.1%oftheworld’sin2018.

ESGinvestmentsinAustraliaandNewZealandhavegrownsteadily.However,evenwhentheratioofESGinvestmenttothetotalinvestmentinthisregionexceeded60%in2018,theglobalsharewas2.4%,whichwasnotlarge.

61ESGInvestment

Asdescribedabove,ESGinvestmentsaregenerallyexpanding,althoughthereareregionalvariations.Thepro?tabilityofESGinvestmentsmayhavebeguntoberecognizedglobally.

TheESGinvestmentstrategyoriginatefromthepolicytoexcludeinvestmentsincompaniesandindustriesthatdonotmeetreligiousandethicalstandards.Currently,?nancialinstitutionsareactivelydevelopingandmanagingvariousESGfunds.Dependingontheirportfolioselectionandmanagement,GSIA(

2019

)classi?essustainableinvestingintothefollowingsevencategories:

I.Negative/exclusionaryscreening

Thisisde?nedastheexclusionofafundorportfolioofcertainsectors,companies,orpracticesbasedonspeci?cESGcriteria.Forexample,stocksofcompaniesrelatedtoweapons,nuclearpower,childlabor,alcohol,tobacco,andgamblingareexcludedfromtheportfolio.

II.Positive/best-in-classscreening

Thisisde?nedasinvestmentinsectors,companies,orprojectsselectedfortheirpositiveESGperformancerelativetoindustrypeers.Althoughcom-panieswithpositiveESGperformancecanbeexpectedtohaveexcellent?nancialperformanceoverthemediumtolongterm,thereisgrowingcon-cernthatthenumberofinvestmentcandidatecompanieswillbesmallerthanthatundernegative/exclusionaryscreening.

III.Norms-basedscreening

Thisisde?nedasthescreeningofinvestmentsagainstminimumstandardsofbusinesspracticebasedoninternationalnorms,suchasthoseissuedbytheOrganisationforEconomicCo-operationandDevelopment(OECD),InternationalLabourOrganization(ILO),UN,andUnitedNationsChildren’sFund(UNICEF).TheUnitedNationsGlobalCompact(UNGC),of?ciallylaunchedin2000,isarepresentativeofinternationalstandards.Ithasawiderinvestmentscopethanthepositive/best-in-classscreening.ItismainlyusedinEurope.

IV.ESGintegration

Thisisde?nedasthesystematicandexplicitinclusionofinvestmentman-agersofenvironmental,social,andgovernancefactorsin?nancialanalysis.Thisstrategyisrapidlyexpandingthroughinstitutionalinvestorswhomanagelong-terminvestmentfunds.

V.Sustainabilitythemedinvesting

Thisisde?nedasinvestmentinthemesorassetsspeci?callyrelatedtosustainability(e.g.,cleanenergy,greentechnology,orsustainableagricul-ture).Greenbonds,transitionbonds,andsolarfundshavealsobeendeveloped.

VI.Impact/communityinvesting

Thisisde?nedastargetedinvestmentsaimedatsolvingsocialorenviron-mentalproblems,includingcommunityinvesting,wherecapitalisspeci?-callydirectedtotraditionallyunderservedindividualsorcommunities,

1.3ActivitiesandStrategies7

aswellas?nancingprovidedtobusinesseswithaclearsocialorenviron-mentalpurpose.Manysmallbusinessesareincludedasinvestmenttargets.Venturecapitalistsoftenadoptthisstrategy.

VII.Corporateengagementandshareholderaction

Thisisde?nedastheuseofshareholderpowertoin?uencecorporatebehavior,includingthroughdirectcorporateengagement(i.e.,communi-catingwithseniormanagementand/orboardsofcompanies),?lingorco-?lingshareholderprop