Sustainable investing in the oil industry - Is it possible?

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School of Business | Bachelor's thesis
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Date
2022
Major/Subject
Mcode
Degree programme
Rahoitus
Language
en
Pages
21
Series
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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