Multi–Criteria Decision Analysis: Methods to Define and Evaluate Socially Responsible Investments

International Journal of Management and Decision Making, 14(1), 44-65 (2015)

21 Pages Posted: 22 Jan 2014 Last revised: 22 Jun 2016

See all articles by Tim Verheyden

Tim Verheyden

Arabesque Partners; Vrije Universiteit Brussel - Faculty of Economic and Social Sciences and Solvay Business School

Lieven De Moor

Vrije Universiteit Brussel

Date Written: 2015

Abstract

Originally being a niche strategy followed by few investors, socially responsible investing (SRI) now represents a significant part of the assets under management. After summarizing empirical evidence on the performance of SRI funds, we present four challenges that are facing the further development of SRI and point to multi-criteria decision analysis (MCDA) as the methodological framework that could help overcome these challenges. A first group of challenges calls for the development of a social performance indicator, which can score and classify mutual funds with respect to social responsibility. Another challenge requires a transparent tool for retail investors interested in SRI to learn about their SRI preferences. Reviewing the three schools of available MCDA methods, we present a concrete approach for future research in building such a social performance indicator and a retail investor tool for SRI.

Keywords: multi-criteria decision analysis, mutual funds, socially responsible investing, ESG

JEL Classification: C44, G10, G11, G12

Suggested Citation

Verheyden, Tim and De Moor, Lieven, Multi–Criteria Decision Analysis: Methods to Define and Evaluate Socially Responsible Investments (2015). International Journal of Management and Decision Making, 14(1), 44-65 (2015). Available at SSRN: https://ssrn.com/abstract=2382813 or http://dx.doi.org/10.2139/ssrn.2382813

Tim Verheyden (Contact Author)

Arabesque Partners ( email )

43 Grosvenor Street
LONDON, W1K 3HL
United Kingdom
+447878679314 (Phone)

HOME PAGE: http://www.arabesque.com/s-ray

Vrije Universiteit Brussel - Faculty of Economic and Social Sciences and Solvay Business School ( email )

Pleinlaan 2
Brussels, 1050
Belgium

Lieven De Moor

Vrije Universiteit Brussel ( email )

Department of Business
Pleinlaan 2
Brussels, B-1050
Belgium
+32 498 616463 (Phone)

HOME PAGE: http://goo.gl/qntmYg

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