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Title: Sustainable finance and social responsibility: a new paradigm
Authors: Vargas Preciado, Lucely
Supervisore/Tutore: Fanni, Maurizio
Fanni, Maurizio
Issue Date: 6-Apr-2009
Publisher: Università degli studi di Trieste
With the globalization Businesses are getting a lot of power and they are more influence companies in the society than before. Business malpractices have the potential to inflict enormous harm on individual, communities, and the environment; the demands from all stakeholders to be a business to behave ethically greatly have been increased at this time. Moreover, ethical infractions and abuses of power are presented in business and affect the corporations reputation and as well as societies. There are needs to be a call for responsible and sustainable corporate behaviour. This corporate behaviour can create a competitive advantage and will generate value, social and economical value. This thesis will be presented such an alternative approach.

This thesis presents an approach of the new paradigm. It is an integration of the 3 dimensions: ethical, corporate social responsibility and sustainability that generate social and economical value. The social value is for present and future generations: when corporations are helping development communities, poverty reductions, increased standards of life and education, increasing the work conditions and possibilities of employ’s companies, communities and other stakeholders. Economical value has many benefits to a corporation such as: decrease reputation risk; access the competitions of financial market, fidelity with customers and employees, increase firm’s reputations, reductions of cost and others.

This research will try to answer some questions such as: what is the business of business and what is its social responsibility? How this responsibility is applied in the field of finance? How this corporate social responsibility is measured? And does this CSR affects the share price value of a company?

The methodology used is a review of literature about Business ethics, CSR, SRI, ethical rating, sustainable reports, model market, and events studies. A case study of the Italian Insurance Company: Generali Group is presented. In this case study, it will be analyzed: (1) The Generali ethical, CSR and sustainable compromise – The integration of these three dimensions- and (2) how this information on CSR affects Generali Insurance’s share price value.

In order to measure the effects of the three dimensions –ethical/CSR/sustainable in share price, it is conducted an event study, which measure change in share prices based on the announcement of events. In that way, it is possible to determine if share prices that reflect firm’s financial performance are affected by public information of ethical, environmental, social and economical performance. Particularly, it will be measured the effect of Ethical/CSR/sustainable events of the Generali Group Insurance group in its share prices. Moreover, for this reach, it was consulted available information on the web side and sustainable reports regarding to Generali Group ethical/CSR/sustainable compromise. Additionally some informal meetings were taken place with, the Director of Sustainable Department in Generali Insurance Company in Trieste, Marina Donnato in order to clarify several issues

The conclusion of this research is that the business of business is to be ethically, CSR and sustainable. It can be extrapolated to sustainable finance; in this way business will generate social value and economically value. The economical value is a consequence of the social value generation. In the long term, social and economically value will converge. Moreover, in the finance field this integration of ethical, CSR and sustainable is necessary: for instance Social responsible investments (SRI) and social finance - micro credits focus on satisfactions of stakeholders.

Other conclusion is that Generali is an Insurance company with high standards in ethical, Corporate Social responsibility and sustainability and big social concerns. It is very difficult to generalize about the relationship between CSR and profitability. Ethical/CSR/sustainable is consistently with the long term maximization shareholder value because for a company acting CSR represents a significant value for investors, company can be perceived as an ethical, CSR, sustainable. It perceptions affects positively his reputation more in the lung term. In the short time it is less impacted. The analysis using events studies methods and model market showed that ethical/CSR/sustainable news about Generali Events that not generate very significant abnormal returns different from zero. However some of these were positive. It could be interpreted as the market is responding positively to the news of ethical/CSR/suitable issues. But also it could be that investors are not very well informed about ethical/CSR/Sustainability and in SRI. However the ethical/CSR/sustainable compromise generates more value in the run term because of company reputation, and other benefits as employee and customer’s fidelity. Other conclusion is a way to measure CSR is using ethical rating.

This document present an introductory part, Chapter 1. Chapter 2 gives a framework of the ethical issues of corporation’s operations and covers the following topics: MNCs Business ethics and Social responsibility, business ethics, mainly the debates made by Hoffman, which is related to ethical dimensions of the making decisions in a framework of business operation’s ethics systems, The topic of corporations operating in third world countries general overview, and General Standards of Behavior -Code of Principles and MNCs. It is important to clarify that the values and principles in Corporation, Medium, and small enterprises, the ethical principles, values and ethics are referring to same aspects, (human rights, environmental, social, economical aspects). But in this research only the ethical approach for Corporations will be considered.

Chapter 3 presents the analysis about: what does it mean corporate social responsibility (CSR)? what is the responsibility of the business?, For this scope, the chapter covers the following aspects such as: The meaning of corporate social responsibility, the concept of CSR based on the definition of the space between the law and social expectation, the expectation of stakeholders and incorporating of identity in the sustainability strategy CSR, the evolution of the concept, the traditional ideology and modern ideology of CSR and why the concept is changing, corporate social responsibility benefits, corporate social responsibility international perspective.

In Chapter 4, it is analyzed the following issues: why the finance a new paradigm is necessary, what ethical finance it about, based on concepts such as CSR/SRI and ethical sustainable finance focus in two levels: Macro level and Micro level. The Macro level is focus to the topic of (1) Social Responsible Investments -definitions, growing, background, some trends and so on- Sustainability. Other areas and instruments of ethical finance in a macro level are presented such as: (2) Ethics /CSR and financial sectors, Sustainable index (stock exchanges), (3) Cleantech Venture capital, (4) Financial services, (5) Institutional investors, (6) International institution will be analized. The Micro level make reference to the (7) Social Finance and (8) micro credit issues: In chapter 5, It is analyzed how social responsibility is measured and monitored. In addition, some other topic such as: CSR and ethics rating agencies, ethics rating methodologies, rating agencies in practicing are discussed.
Chapter 6, It is discussed how the Generali insurance company presents his CSR/ sustainable compromises. This chapter defines the event to measure the CSR impact on the company value (share value in the short time). Some aspects of Generali Code ethics, values, strategy, CSR initiative (information included in CSR reports and websites) are analyzed.
In Chapter 7, an analysis is carried out to verify if the share prices that reflect firm’s financial performance are affected by public information of environmental, social and economical performance. In order to measure the effects of CSR on share price, an event study is carried out which measures changes in share prices based on the announcement of events. Particularly, it will be measure the effect of CSR’s events of the Generali Group Insurance group in its share prices. Finally, conclusions, suggestion- recommendations and issues of further research are discussed.
Ciclo di dottorato: XXI Ciclo
metadata.dc.subject.classification: FINANZA AZIENDALE
Keywords: Ethical, Corporate social responsible (CSR)/sustainable dimensionscorporate sustainable reportcorporate wealth-stakeholdersSocial responsible (SRI)ethics ratingevents studiesmarket model
Type: Doctoral
Language: en
Settore scientifico-disciplinare: SECS-P/09 FINANZA AZIENDALE
NBN: urn:nbn:it:units-7433
Appears in Collections:Scienze economiche e statistiche

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