Conventions for Green Investments: Stock Indices and Bond Ratings in the Age of Sustainable Finance
(2024) Handbook of Economics and Sociology of Conventions — ISBN: [978-3-030-52130-1], published
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- Abstract
- This chapter presents the work of economics and sociology of conventions that shed light on dynamics at the heart of contemporary capitalism. To act in situations of uncertainty, financial market participants do not base their investment decisions exclusively on the comments of opinion leaders. They also rely on indicators such as stock market indices and credit ratings. These indicators are supported by multiple measurement conventions (selection, weighting, revision techniques, etc.). Once stabilized, they generate conventions of interpretation that can be very powerful: through their influence on asset managers, the main stock market indices today determine the allocation of billions of dollars. The sustainable finance movement proposes to rethink the logic of financial decision-making. This implies, in particular, the emergence of new conventions of interpretation, based on new indicators, such as “ESG indices” and “green ratings”. The chapter first outlines the conventions governing decision-making in the stock market, then addresses the issues at stake in the bond market. In both cases, traditional indicators need to be adapted to the new criteria of sustainable finance.
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Duterme, T. (2024). Conventions for Green Investments: Stock Indices and Bond Ratings in the Age of Sustainable Finance. In Diaz-Bone, Rainer, Larquier, Guillemette (ed.), Handbook of Economics and Sociology of Conventions (Springer). Springer, Cham. https://doi.org/10.1007/978-3-030-52130-1_62-1