Sustainable investing in the oil industry - Is it possible?

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School of Business | Bachelor's thesis
Electronic archive copy is available locally at the Harald Herlin Learning Centre. The staff of Aalto University has access to the electronic bachelor's theses by logging into Aaltodoc with their personal Aalto user ID. Read more about the availability of the bachelor's theses.

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Date

2022

Department

Rahoituksen laitos

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Mcode

Degree programme

Rahoitus

Language

en

Pages

21

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Abstract

This thesis analyses if sustainability affects the returns on public oil companies listed in the USA. Tilting into the best-in-class companies of a brown industry is theoretically proven to improve investment returns and the ESG performance of a company. My hypothesis is based on the best-in-class theory that the most sustainable companies would have better performance than the least sustainable ones. If the hypothesis holds, tilting could be a potential sustainable investing strategy. I tested the hypothesis with USA based oil companies and analyzed their financial performance with time series regressions. The analysis demonstrated no significant difference between the companies, and I was not able to find evidence that sustainability affects the returns of the oil industry. These findings suggest that sustainably minded investor does not get added value from tilting.

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Thesis advisor

Joenväärä, Juha

Keywords

best-in-class, tilting, sustainable investing, brown industry, oil industry, ESG

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https://urn.fi/URN:NBN:fi:aalto-202303122362

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