Abstract

Socially responsible investing (SRI) seeks to combine financial returns with social and environmental performance. In the context of the Covid-19 pandemic, SRI is seen as an alternative way to maintain sustainable returns. This article attempts to assess the impact of COVID-19 on the performance of socially responsible stocks. In other words, we test the resilience of ESG (Environmental, Social and Governance) oriented companies’ stock prices to the global crisis, and compare it with the performance of selected non-ESG stocks. To do so, we focus on companies listed on the Moroccan, the Egyptian and the Turkish stock exchanges. We use the event study methodology, which relies mainly on calculating the daily abnormal returns of each company and aggregating them over an event window to test their statistical significance. The results reveal that all the companies listed on these three stock exchanges suffered from the COVID-19 crisis, posting negative abnormal returns. However, the ESG oriented companies listed on the Turkish stock exchange were more resilient compared to non-ESG companies. Sustainable investing underperformed non-ESG investing in Morocco and Egypt, as ESG oriented companies posted more pronounced negative abnormal returns, compare to non-ESG companies. So, unlike Turkey, ESG oriented companies were less portfolio protective alternative during the crisis in Morocco and Egypt.

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