Sustainability and Financial Markets

Institutional Arrangements and Patterns of Perception
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Project investigator: Prof. Dr. Stefanie Hiß

Funded by: VolkswagenStiftung im Rahmen der Förderinitiative Schumpeter-FellowshipsExternal link

Michael Göbel (2012-2014)
Sebastian Nagel (2012-2015)
Jakob Kunzlmann (till 2012)
Anna Irmisch (till 2011)

Duration: October 2009-September 2014 (extended till March 2015)

Financial markets and sustainability are two topics that have gained enormous public attention in the last few years. Financial markets are increasingly influencing everyday life and continue to expand into ever more societal subsystems. In particular in the economic system the impact of financial markets' logics is prevalent. Corporate financing via financial markets demands the adaptation of corporations to financial markets' rules and institutions. One important selection criterion on the financial markets is profitability. Generally, investment horizons and the level of profit expectations differ according to the form of the investment. As a matter of fact, however, short-termism and profit maximising strategies have been dominating in the years preceding the global financial crisis.

The concept of sustainability has also become highly popular in the last years. Evolved from an environmental discourse sustainability has advanced to a general societal principle. As socially responsible investment (SRI) sustainability has arrived on the financial markets and has developed into an additional decision criterion for investments. Instruments such as indices reflecting sustainability criteria, e.g. the Dow Jones Sustainability Index, or intermediaries specialised in sustainability issues, e.g. sustainability rating agencies, support the coordination between supply and demand.

The research project focuses on this developing institutional arrangement of sustainability and financial markets. Thereby, it ties in with existing studies about socially responsible investment, but goes essentially beyond that by taking up a sociological perspective on the object of investigation and by putting it into a comprehensive societal context.

The project consists of various sub-areas covering in-depth research of the following questions: From an international comparative perspective it will be analyzed how and why the sustainable financial market develops differently plus not simultaneously in countries like Germany, the United Kingdom and the United States. Furthermore insights into the underlying mechanisms and logics - the institutional arrangements - of the sustainable financial market segment will be elaborated by assessing its artefacts, e.g. rating, accounting and stock indices, and by comparing them to their 'conventional' pendants. Another central research interest is how both the financial market and sustainability are embedded in society resp. in its different societal arenas, like the economy, the media, the civil society and politics. How do corporations and investors cope with various in- and external expectations of the financial market on the one hand, and claims for sustainability on the other? All scientific results will be synthesized and reflected in the light of theoretical approaches and empirical results of sociology, political sciences, economics, communication studies, and social-ecological sustainability research.