Dynamic relationships between crude oil prices and socially responsible investing in Brazil: evidence for linear and non-linear causality

What is it about?

The article shows that, in spite of their efforts to become more socially responsible, Brazilian firms that have adhered to the Brazilian Corporate Sustainability Index (ISE) in recent years are influenced to a certain extent by the crude oil prices, especially the WTI crude. In other words, even though socially responsible investing screens have expanded to include matters such as corporate governance, environmental records and workplace standards, there are still many grey areas in the composition of the so-called socially responsible indices, particularly, in Brazil.

Featured Image

Why is it important?

The findings are of paramount interest to different stakeholders. For consumers increasingly reaching for “green” or “fair trade products”, the identification of the product source plays a key role in their decisions. For portfolio managers and particularly investors deriving non-financial utility from investing in Socially Responsible Investment (SRI) funds or in companies meeting high standards of corporate social responsibility, new insights about the impact of oil on the so called socially responsible firms are of the utmost importance as they may properly review their investment screens. Finally, for organisations offering reporting principles and standard disclosures to measure, understand and communicate ESG information, crude oil dependency, if present, should definitely be considered in future guidelines.

Perspectives