Influential factors of investment professionals for the integration of sustainable investments into portfolio choiceCélia Jeanne Erika Kaiser

4. März 2020

Although social, economic, and political interests in sustainable investments have increased significantly in recent years, the market share of sustainable funds and mandates in Germany was still 4.5 percent in 2018 (Forum Nachhaltige Geldanlagen e.V., 2019). Previous research on possible influential factors is still fragmented – especially with a focus primarily on investment professionals. However, studies suggest that short-termism in the investment landscape could be an explanation for insufficient integration efforts of sustainable investments into portfolio choice. Exploring this question and identifying additional factors creates a knowledge gap, which is filled by this study.
The aim of this paper is therefore to investigate the influence of short-termism on investment professionals and to identify additional inhibiting and supporting factors for the integration of sustainable investments. The findings derived from ten interviews conducted show that besides major supportive key factors – such as societal awareness and the consideration of environmental, social, and corporate governance (ESG) criteria into risk management – definition issues, extra costs, and short-term factors do play a major inhibiting role for the integration of sustainable investments into portfolio choice. Accordingly, the investment sector appears to be in a transition process, in which traditional finance is increasingly confronted with new structural and investment requirements, revealing the different integration levels of investment professionals towards sustainable investments. These propositions align well with existing academic literature, in general, and contribute to new insights related to factors influencing the integration of sustainable investments into portfolio choice. While this study holds multiple implications for academic scholars and practitioners alike, more research is needed to adequately persuade the investment sector in delivering ambitious integration efforts in order to close urgent investment gaps in the future.