The Allocation of Socially Responsible Capital

Daniel  Green; Benjamin N. Roth

Working Paper | 2020

The Allocation of Socially Responsible Capital

Abstract

A rapidly increasing share of asset allocation decisions incorporate social values in addition to financial considerations. We argue that the most common strategies for socially motivated investing, which only consider the social value of the firms in an investors’ portfolio, are misguided. We develop a tractable framework in which commercial and social investors compete, and identify alternative strategies for social investors that result in higher social welfare and deliver higher financial returns. We discuss several normative implications for socially-motivated investors. From the enterprise perspective, we demonstrate that a focus on increasing profitability can have a greater social impact than a focus on direct social value creation.

Keywords: socially responsible investing; Assets; Resource Allocation; Social Issues; Decision Making; Strategy; Framework;

Language: English

Format: Print

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Citation:

Green, Daniel, and Benjamin N. Roth. "The Allocation of Socially Responsible Capital." Working Paper, August 2020.

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The Allocation of Socially Responsible Capital

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