Vol. 11 No. 1 (2023)
March 2023

Articles

The EU regulation of sustainable investment: The end of sustainability trade-offs?

Published 2023-03-31

  • Adam P. Balcerzak
    • ,
  • Robert Kenyon MacGregor
    • ,
  • Radka MacGregor Pelikánová
    • ,
  • Elżbieta Rogalska
    • ,
  • Dawid Szostek

Adam P. Balcerzak
University of Warmia and Mazury in Olsztyn

Robert Kenyon MacGregor
Metropolitan University Prague

Radka MacGregor Pelikánová
Metropolitan University Prague

Elżbieta Rogalska
University of Warmia and Mazury in Olsztyn

Dawid Szostek
Nicolaus Copernicus University in Toruń

Abstract

Objective: The objective of the article is to explore and assess whether the SFDR legal framework creates a legitimate, effective, and efficient mechanism that supports a genuinely sustainable investment and eliminates greenwashing and other trade-offs. It targets the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial service sector aka SFDR which sets a law duty on financial market participants and advisers concerning information about sustainability (Art. 1). Corporate Social Responsibility (CSR) parasitic practices, such as greenwashing, are to be eliminated in disclosures, communications, and internet pages (Art. 9 – Art.13) by appropriate information (Art. 1(17)) and the principle of doing no significant harm (Art. 2a).

Research Design & Methods: A deep holistic five-step chronological contextual analysis of key legislative and semi-legislative instruments with LIWC assessment was performed. It was supported with a comparative and teleological interpretation and refreshed with Socratic questions.

Findings: The research led to four rather unexpected propositions: (i) the endorsement of SFDR by EU institutions varies, (ii) key instruments are expressed neutrally and technically but their authenticity varies, (iii) morality appears to be avoided, and (iv) the interpretation litigates against an artificial disassociation of concepts linked to sustainability, CSR, and shared values.

Implications & Recommendations: Since the performed analysis was instantaneous and textual and led to rather unexpected propositions, it should be juxtaposed and extended by adding the longitudinal dimension, the applied dimension, and the outside perspective along with empirical field observation.

Contribution & Value Added: This is a pioneering study regarding the wording assessment of the EU law on sustainability. Considering the critical importance of a legitimate, effective, and efficient legal framework in this area and the pre-existing academic vacuum regarding such an exploration of SFDR and related instruments, this contribution is a valuable first step.

       

Keywords

Corporate Social Responsibility (CSR), Regulation 2019/2088 (SFDR), sustainable investment

(PDF) Save

References

  1. Androniceanu, A. (2021). Transparency in public administration as a challenge for a good democratic gov-ernance. Administratie si Management Public, 36, 149-164. https://doi.org/10.24818/amp/2021.36-09
  2. Androniceanu, A., & Marton, D.- M., (2021). The psychosocial impact of the Romanian government measures on the population during the COVID-19 pandemic. Central European Public Administration Re-view, 19(1), 7-32. https://doi.org/10.17573/cepar.2021.1.05
  3. Androniceanu, A. (2020). Major structural changes in the EU policies due to the problems and risks caused by COVID-19. Administratie si Management Public, 34, 137-149. https://doi.org/10.24818/amp/2020.34-08
  4. Andronie, M., Lăzăroiu, G., Ștefănescu, R., Uță, C., & Dijmărescu, I. (2021a). Sustainable, Smart, and Sensing Technologies for Cyber-Physical Manufacturing Systems: A Systematic Literature Review. Sustainability, 13(10), 5495. https://doi.org/10.3390/su13105495
  5. Andronie, M., Lăzăroiu, G., Iatagan, M., Hurloiu, I., & Dijmărescu, I. (2021b). Sustainable Cyber-Physical Pro-duction Systems in Big Data-Driven Smart Urban Economy: A Systematic Literature Review. Sustainability, 13(2), 751. https://doi.org/10.3390/su13020751
  6. Apostu, S-A., & Gigauri, I. (2023). Sustainable development and entrepreneurship in emerging countries: Are sustainable development and entrepreneurship reciprocally reinforcing? Journal of Entrepreneurship, Management, and Innovation, 19(1), 41-77. https://doi.org/10.7341/20231912
  7. Areeda, Ph.E. (1996). The Socratic method. Harvard Law Review, 109(5), 911-922.
  8. Ashford, N.A., Hall, R.P., et al. (2020), Addressing Inequality: The First Step Beyond COVID-19 and Towards Sustainability. Sustainability, 12, 5404. https://doi.org/10.3390/su12135404.
  9. Balcerzak, A., & MacGregor Pelikánová, R. (2020). Projection of SDGs in Codes of Ethics – Case study about Lost in Translation?. Administrative Sciences, 10(4), 1-18. Paper 95.
  10. Borychowski, M, Stępień, S., Polcyn, J, Tošović-Stevanović, A., Ćalović, D., Lalić, G., & Žuža, M. (2020). Socio-Economic Determinants of Small Family Farms’ Resilience in Selected Central and Eastern European Countries. Sustainability, 12(24),10362. https://doi.org/10.3390/su122410362
  11. Boyd, R.L. (2017). Psychological text analysis in the digital humanities. In S. Hai-Jew (Ed.), Data Analytics in Digital Humanities (pp. 161-189), Springer International Publishing. https://doi.org/10.1007/978-3-319-54499-1_7
  12. Carroll, A.B. (2016). Carroll’s pyramid of CSR: taking another look. International Journal of Corporate Social Responsibility, 1:3. https://doi.org/10.1186/s40991-016-0004-6
  13. Cayón, E., & Gutierrez, J.C. (2021). Sin stocks and ESG scores: Does the nature of your business really mat-ter?. Journal of International Studies, 14(3), 114-123. https://doi.org/10.14254/2071-8330.2021/14-3/7
  14. Çera, G., Belas, J., Marousek, J., & Çera, E.(2020). Do size and age of small and medium-sized enterprises matter in corporate social responsibility?. Economics and Sociology, 13(2), 86-99. https://doi.org/10.14254/2071-789X.2020/13-2/6
  15. Çera, G., Khan, K.A., Bláhová, A., & Belas, Jr., J. (2022). Do owner-manager demographics in SMEs matter for corporate social responsibility?. Equilibrium. Quarterly Journal of Economics and Economic Policy, 17(2), 511-531. https://doi.org/10.24136/eq.2022.018
  16. D´Adamo, I., & Lupi, G. (2021). Sustainability and Resilience after COVID-19: A Circular Premium in the Fash-ion Industry. Sustainability, 13, 1861.
  17. Dat, P.T. & Hung, H.T. (2023). Determinants of Sustainable Development: A Case Study in Vietnam. Monte-negrin Journal of Economics, 19(2), 97-107. https://doi.org: 10.14254/1800-5845/2023.19-2.8
  18. Dvouletý, O. (2017). What is the Relationship between Entrepreneurship and Unemployment in Visegrad Countries?. Central European Business Review, 6(2), 42-53. https://doi.org/10.18267/j.cebr.179
  19. EurLex (2022a). Document 32019R2088 about Regulation 2019/2088. Retrieved from https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32019R2088&qid=1651868817930 on May 20, 2022.
  20. EurLex (2022b). Document 32020R0852 about Regulation 2020/52. Retrieved from https://eur-lex.europa.eu/legal-content/EN/LSU/?uri=CELEX:32020R0852 May 20, 2022.
  21. European Commission (2020). Press Corner - Speech by President von der Leyen at the European Parliament Plenary on the new MFF, own resources and the Recovery Plan on May 13, 2020. Retrieved from https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_20_877 on May 23, 2020.
  22. European Commission (2022). Sustainability-related disclosure in the financial services sector. Retrieved from https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/sustainability-related-disclosure-financial-services-sector_en on May 20, 2022.
  23. European Economic and Social Committee (2019). Toward a more resilient and sustainable European Econ-omy. Retrieved from https://www.eesc.europa.eu/en/our-work/opinions-information-reports/opinions/towards-more-resilient-and-sustainable-european-economy-own-initiative-opinion on May 23, 2020.
  24. European Parliament (2022). Legislative Observatory. Retrieved from https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2018/0179(COD)&l=en on May 20, 2020.
  25. Gallardo-Vázquez, D., Valder, D., Valdez, L., & Castuera-Diáz, A.M. (2019). Corporate Social Responsibility as an Antecedent of innovation, Reputation, and Competitiveness Success: A Multiple Mediation Analysis. Sustainability, 11(20), 5614.
  26. Glass, G.V. (1976). Primary, secondary, and meta-analysis of research. Educational Researcher.
  27. Hála, M., Cvik, E.D., & MacGregor Pelikánová, R. (2022). Logistic Regression of Czech Luxury Fashion Purchas-ing Habits During the Covid-19 Pandemic – Old for Loyalty and Young for Sustainability?. Folia Oeconomi-ca Stetinensia, 22(1), 85-110. https://doi.org/10.2478/foli-2022-0005
  28. Kiba-Janiak, M., Cheba, K., Mucowska, M., & de Oliveira, L.K. (2022). Segmentation of e-customers in terms of sustainable last-mile delivery. Oeconomia Copernicana, 13(4), 1117-1142. https://doi.org/10.24136/oc.2022.032
  29. Korzyński, P., Mazurek, G., Altman, A., Ejdsys, J., Kazlauskaite, R., Paliszewska, J., Wach, K., Ziemba, E. (2023). Generative Artificial Intelligence as a New Context for Management Theories: Analysis of ChatGPT. Cen-tral European Management Journal, 31(1). https://doi.org/10.1108/CEMJ-02-2023-0091
  30. Kowalska, A., & Bieniek, M. (2022). Meeting the European green deal objective of expanding organic farm-ing. Equilibrium. Quarterly Journal of Economics and Economic Policy, 17(3), 607-633. https://doi.org/10.24136/eq.2022.021
  31. Kramer, M.R., & Pfitzer, M.W. (2016). The Ecosystem of Shared Value. Business and society. Harvard Business Review, October 2016.
  32. Krippendorff, K. (2013). Content Analysis: An Introduction to its Methodology. Los Angeles, CA: Sage.
  33. Kuckartz, U. (2014). Qualitative Text Analysis—A Guide to Methods, Practice and Using Software, 1st ed. London: SAGE.
  34. Lăzăroiu, G., Andronie, M., Uţă, C., & Hurloiu, I. (2019). Trust Management in Organic Agriculture: Sustaina-ble Consumption Behavior, Environmentally Conscious Purchase Intention, and Healthy Food Choices. Frontiers in Public Health, 7, 340. https://doi.org/10.3389/fpubh.2019.00340
  35. Lăzăroiu, G., Neguriţă, O., Grecu, I., Grecu, G., & Mitran, P.C. (2020). Consumers’ Decision-Making Process on Social Commerce Platforms: Online Trust, Perceived Risk, and Purchase Intentions. Frontiers in Psycholo-gy, 11, 890. https://doi.org/10.3389/fpsyg.2020.00890
  36. MacGregor, R.K., Sroka, W., & MacGregor Pelikánová, R. (2020a). The CSR Perception of Front-line Employees of Luxury Fashion Businesses: Fun or Free for Sustainability?. Organizacija, 53(3), 198-211. https://doi.org/10.2478/orga-2020-0013
  37. MacGregor, R., Sroka, W., & MacGregor Pelikánová, R. (2020b). A Comparative Study Of The Low Managers Attitude To Marketing And Innovations In Luxury Fashion Industry: Pro – Or Anti-CSR?. Polish Journal of Management Studies, 21(2), 240-255. https://doi.org/10.17512/pjms.2020.21.2.17
  38. MacGregor Pelikánová, R., & Hála, M. (2021). CSR Unconscious Consumption by Generation Z in the COVID-19 era – Responsible Heretics not Paying CSR Bonus?. Journal of Risk and Financial Management, 14(8), 390. https://doi.org/10.3390/jrfm14080390
  39. MacGregor Pelikánová, R., & MacGregor, R.K. (2020a). The Willingness of Generation Z to Officially Support CSR – A Central European Study. DANUBE: Law, Economics and Social Issues Review, 11(4), 271-282. https://doi.org/10.2478/danb-2020-0016
  40. MacGregor Pelikánová, R., & MacGregor, R.K. (2020b). The EU puzzling CSR regime and the confused percep-tion by ambassadors of luxury fashion businesses: A case study from Pařížská. Central European Business Review, 9(3), 74-108. DOI: 10.18267/j.cebr.240
  41. MacGregor Pelikánová, R., & Rubáček, Ph. (2022). Taxonomy for transparency in non-financial statements – clear duty with unclear sanction. Danube, 13(3), 173-195. https://doi.org/10.2478/danb-2022-0011
  42. MacGregor Pelikánová, R., Němečková, T., & MacGregor, R.K. (2021a). CSR Statements in International and Czech Luxury Fashion Industry at the onset and during the COVID-19 pandemic – Slowing Down the Fast Fashion Business?. Sustainability, 13(7), 3715. https://doi.org/10.3390/su13073715
  43. MacGregor Pelikánová, R., MacGregor, R.K., & Černek, M. (2021b). New trends in codes of ethics: Czech business ethics preferences by the dawn of COVID-19. Oeconomia Copernicana, 12(4), 973-1009. https://doi.org/10.1108/10.24136/oc.2021.032
  44. MacGregor Pelikánová, R., Cvik, E.D., & MacGregor, R.K. (2021c). Addressing the COVID-19 challenges by SMEs in the hotel industry – a Czech sustainability message for emerging economies. Journal of Entrepre-neurship in Emerging Economies, 13(4), 525-546. https://doi.org/10.1108/JEEE-07-2020-0245
  45. Majerova, J., Sroka, W., Krizanova, A., Gajanova, L., Lăzăroiu, G., & Nadanyiova, M. (2020). Sustainable Brand Management of Alimentary Goods. Sustainability, 12(2), 556. https://doi.org/10.3390/su12020556
  46. Matuszewska-Pierzynka, A. (2021). Relationship between corporate sustainability performance and corpo-rate financial performance: evidence from U.S. companies. Equilibrium. Quarterly Journal of Economics and Economic Policy, 16(4), 885-906. https://doi.org/10.24136/eq.2021.033
  47. Metzker, Z., Marousek, J., Hlawiczka, R., Belas, J.Jr., & Khan, K.A. (2021). The perception of the market and operational area of business by service sector and tourism companies in terms of CSR implementation. Journal of Tourism and Services, 23(12), 217-236. https://doi.org/10.29036/jots.v12i23.328
  48. Metzker, Z., & Zvarikova, K. (2021). The perception of company employees by SMEs with CSR concept im-plementation. International Journal of Entrepreneurial Knowledge, 9(1), 81-96. https://doi.org/10.37335/ijek.v9i1.128
  49. Mishchuk, H., Štofková, J., Krol, V., Joshi, O., & Vasa, L. (2022). Social Capital Factors Fostering the Sustainable Competitiveness of Enterprises. Sustainability, 14(19), 11905. https://doi.org/10.3390/su141911905
  50. Mura, L., Hajduová, Z., Smorada, M., & Jakubova, Z. (2021). Employee motivation and job satisfaction in family-owned businesses. Problems and Perspectives in Management, 19(4), 495-507. https://dx.doi.org/10.21511/ppm.19(4).2021.40
  51. Nowak, A., & Kasztelan, A. (2022). Economic competitiveness vs. green competitiveness of agriculture in the European Union countries. Oeconomia Copernicana, 13(2), 379-405. https://doi.org/10.24136/oc.2022.012
  52. Otavova, M., Glaserova, J. & Hasikova, I. (2023). Social Responsibility for Insurance Companies. Montenegrin Journal of Economics, 19(2), 129-140. https//doi.org/10.14254/1800-5845/2023.19-2.11
  53. Polcyn, J. (2021). Eco-Efficiency and Human Capital Efficiency: Example of Small- and Medium-Sized Family Farms in Selected European Countries. Sustainability, 13, 6846. https://doi.org/10.3390/su13126846
  54. Porter, M.E., & Kramer, M.R. (2011). Creating Shared Value. Harvard Business Review, 89(1-2), 62-77.
  55. Reed, D., Niileksela, C.R., & Kaplan, B.A. (2013). Behavioral Economics – A Tutorial for Behavior Analysts in Practice. Behavior Analysis in Practice, 6(1), 34-54. https://doi.org/10.1007/BF03391790
  56. Richterová, E., Richter, M., & Sojková, Z. (2021). Regional eco-efficiency of the agricultural sector in V4 re-gions, its dynamics in time and decomposition on the technological and pure technical eco-efficiency change. Equilibrium. Quarterly Journal of Economics and Economic Policy, 16(3), 553-576. https://doi.org/10. 24136/eq.2021.020
  57. Rosińska-Bukowska, M. (2022). Evolution of corporate social responsibility standards and their implementa-tion in the strategies of the most powerful corporations: Guidelines for the CSR 5.0 concept. Internation-al Entrepreneurship Review, 8(2), 25-35. https://doi.org/10.15678/IER.2022.0802.02
  58. Rozsa, Z., Holubek, J., Vesela, Z., & Soboleva, O. (2022). Antecedents and barriers which drive SMEs in rela-tion to corporate social responsibility? Literature review. International Journal of Entrepreneurial Knowledge, 10(2), 107-122. https://doi.org/10.37335/ijek.v10i2.174
  59. Samoliuk, N., Bilan, Y., Mishchuk, H., & Mishchuk, V. (2022). Employer brand: key values influencing the intention to join a company. Management & Marketing. Challenges for the Knowledge Society, 17(1), 61-72. https://doi.org/10.2478/mmcks-2022-0004
  60. Schmidt, F.L., & Hunter, J.E. (2014). Methods of Meta-Analysis – Correcting Error and Bias in Research Find-ings. London, UK: SAGE.
  61. Sieja, M., & Wach, K. (2019). The use of evolutionary algorithms for optimization in the modern entrepre-neurial economy: interdisciplinary perspective. Entrepreneurial Business and Economics Review, 7(4), 117-130. http://dx.doi.org/10.15678/EBER.2019.070407
  62. Silverman, D. (2013). Doing Qualitative Research – A Practical Handbook, London, UK: SAGE.
  63. Skvarciany, V., Lapinskaite, I., & Volskyte, G. (2021). Circular economy as assistance for < in OECD countries. Oeconomia Copernicana, 12(1), 11-34. https://doi.org/10.24136/oc.2021.001
  64. Solesvik, M. Z., Torgersen, M., Andersson, G., & Valter, P. (2023). Green Business Models: definitions, types, and life cycle analysis. Forum Scientiae Oeconomia, 10(4), 199-217. https://doi.org/10.23762/FSO_VOL10_NO4_10
  65. Sroka, W., & Szántó, R. (2018). Corporate Social Responsibility and Business Ethics in Controversial Sectors: Analysis of Research Results. Journal of Entrepreneurship, Management and Innovation, 14, 111-126. https://doi.org/10.7341/20181435
  66. Stachova, K., Stacho Z., Raišienė, A.G., & Barokova, A. (2020). Human resource management trends in Slo-vakia. Journal of International Studies, 13(3), 320-331. https://doi.org/10.14254/2071-8330.2020/13-3/21
  67. Stanek-Kowalczyk, A. (2021). Sustainable development start-ups as a new category of enterprises in Poland. International Entrepreneurship Review, 7(2), 67-83. https://doi.org/10.15678/IER.2021.0702.06
  68. Streimikiene, D., & Ahmed, R.R. (2021). The integration of corporate social responsibility and marketing concepts as a business strategy: evidence from SEM-based multivariate and Toda-Yamamoto causality models. Oeconomia Copernicana, 12(1), 125-157. https://doi.org/10.24136/oc.2021.006
  69. Tausczik, Y.R., & Pennebaker, J.W. (2010). The psychological meaning of words: LIWC and computerized text analysis methods. Journal of Language and Social Psychology, 29(1), 24-54. https://doi.org/10.1177/0261927X09351676
  70. Ting, I.W.K., Azizan, N.A., & Bhaskaran, R. et al. (2019). Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms. Sustainability, 12, 26.
  71. Urbancová, H., & Vrabcová, P. (2020). Factors influencing the setting of educational processes in the context of age management and CSR. Economics and Sociology, 13(3), 218-229. https://doi.org/10.14254/2071-789X.2020/13-3/13
  72. Van Tulder, R., May Seitanidi, M., Crane, A., & Brammer, S. (2016). Enhancing the Impact of Cross-Sector Partnerships. Four Impact Loops for Channeling Partnership Studies. Journal of Business Ethics, 135, 1-17.
  73. Van Tulder, R., & Keen, N. (2018). Capturing Collaborative Challenges: Designing Complexity-Sensitive Theo-ries of Change for Cross-Sector Partnerships. Journal of Business Ethics, 150, 315-332.
  74. Vavrova, J. (2022). Effects of the COVID-19 Pandemic on Corporate Social Responsibility in the Hotel Industry – Case of the Czech Republic. Journal of Tourism and Services, 25(13), 213-229. https://doi.org/10.29036/jots.v13i25.414
  75. Vourvachis, P., & Woodward, T. (2015). Content analysis in social and environmental reporting research: Trends and challenges. Journal of Applied Accounting Research, 16(2), 166-195. https://doi.org/10.1108/JAAR-04-2013-0027
  76. Waliszewski, K., & Warchlewska, A. (2021). Comparative analysis of Poland and selected countries in terms of household financial behaviour during the COVID-19 pandemic. Equilibrium. Quarterly Journal of Eco-nomics and Economic Policy, 16(3), 577-615. https://doi.org/10.24136/eq.2021.021
  77. Yin, R.K. (2008). Study Research. Design Methods. Thousand Oaks: Sage.

Downloads

Download data is not yet available.

Most read articles by the same author(s)