Integrating multiple ESG investors' preferences into sustainable investment: A fuzzy multicriteria methodological approach

Integrating multiple ESG investors' preferences into sustainable investment: A fuzzy multicriteria methodological approach

2017 | Escríg-Olmedo, E., Rivera-Lirio, J. M., Muñoz-Torres, M. J., & Fernández-Izquierdo, M. Á.
This paper proposes a methodological approach using fuzzy multicriteria decision-making (MCDM) to integrate the preferences of multiple ESG investors into sustainable investment. The study addresses the challenge of incorporating heterogeneous investor preferences, including both conventional and socially responsible investors, into the investment process. The approach is tested using data from the clothing sector, which is known for significant environmental and social impacts. The method involves two steps: first, assessing ESG company criteria at the production and management levels, and second, integrating investors' preferences to design a unique investment decision solution. The study considers two scenarios representing different investor profiles, including conventional and socially responsible investors. The results show that the proposed method effectively integrates investor preferences, leading to a more accurate investment decision that aligns with both individual and collective preferences. The method is based on fuzzy TOPSIS, which allows for the measurement of ESG performance using both qualitative and quantitative criteria. The results confirm the usefulness of the methodological approach for generating a 'commercial solution' that integrates various investor preferences while maintaining consistency with individual preferences. The study highlights the importance of integrating ESG criteria into investment processes and provides a practical solution for the integration of SR and non-SR investors in a unique investment product. The approach is applicable to various financial decision-making processes where consensus is lacking among market actors. The study contributes to the development of sustainable investment by providing a methodological framework that considers the diverse preferences of investors and facilitates the integration of ESG criteria into investment decisions.This paper proposes a methodological approach using fuzzy multicriteria decision-making (MCDM) to integrate the preferences of multiple ESG investors into sustainable investment. The study addresses the challenge of incorporating heterogeneous investor preferences, including both conventional and socially responsible investors, into the investment process. The approach is tested using data from the clothing sector, which is known for significant environmental and social impacts. The method involves two steps: first, assessing ESG company criteria at the production and management levels, and second, integrating investors' preferences to design a unique investment decision solution. The study considers two scenarios representing different investor profiles, including conventional and socially responsible investors. The results show that the proposed method effectively integrates investor preferences, leading to a more accurate investment decision that aligns with both individual and collective preferences. The method is based on fuzzy TOPSIS, which allows for the measurement of ESG performance using both qualitative and quantitative criteria. The results confirm the usefulness of the methodological approach for generating a 'commercial solution' that integrates various investor preferences while maintaining consistency with individual preferences. The study highlights the importance of integrating ESG criteria into investment processes and provides a practical solution for the integration of SR and non-SR investors in a unique investment product. The approach is applicable to various financial decision-making processes where consensus is lacking among market actors. The study contributes to the development of sustainable investment by providing a methodological framework that considers the diverse preferences of investors and facilitates the integration of ESG criteria into investment decisions.
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