In Search of Sustainability and Financial Returns: The Case of ESG Energy Funds

Jekaterina Kuzmina (Coresponding Author), Dzintra Atstaja (Coresponding Author), Maris Purvins, Guram Baakashvili, Vakhtang Chkareuli

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The world is facing several challenges, and the problem of sustainable development is one of the most important. It is worth considering that European countries are playing a significant role as pioneers in building a sustainable world, such as those promises made by signing the Paris Agreement and European Taxonomy. To achieve ambitious targets within sustainable development, a huge amount of capital is necessary, while financial and capital market participants are expected to demonstrate a high level of engagement in the domain of sustainability. Facing growing interest and demand, a relatively new product—the ESG (environmental, social, and governance) investment fund—was introduced. Scientific literature is providing some controversial views regarding the overall evaluation of this product. Therefore, additional research providing different angles would contribute to a better understanding. This study examines European ESG funds in the energy sector, from the perspective of news flows and investors. It is worth noting that the authors use the word “European” to refer to members of the European Union (EU). The paper consists of the following parts. In the introduction, the current state of this issue is discussed. The following section offers a literature review and a news flow analysis that contributes to a deeper understanding of these issues. A description of the methodology applied for the data analysis follows this, and the final section presents the research results and conclusions. The authors apply statistical analysis and the Carhart model to determine the differences in the performance of the ESG and conventional funds and use their own tool for text analysis to examine the relevance of the topic of ESG to attract client interest. The authors claim that the performance of the European ESG equity funds do not show a statistically significant difference from the non-ESG equity funds in the majority of the periods examined. The application of the adjusted Carhart model demonstrates that the factor of sustainability has a non-significant and negative effect on the fund performance. Finally, the authors highlight the urgent necessity for the unified usage of keywords and terminology, such as “ESG”, “sustainability”, etc., to ensure comparison and attribution possibilities.

Original languageEnglish
Article number2716
JournalSustainability (Switzerland)
Issue number3
Publication statusPublished - Feb 2023


  • Carhart model
  • energy
  • ESG
  • investment funds
  • performance
  • sustainable development

Field of Science*

  • 1.2 Computer and information sciences
  • 1.5 Earth and related Environmental sciences
  • 2.11 Other engineering and technologies

Publication Type*

  • 1.1. Scientific article indexed in Web of Science and/or Scopus database


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