The interaction between socially responsible investment and macroeconomic indicators in the developing countries
Authors: Tuncay Merve , Dorjnaran Bayarmaa 
Published: February 2023

Purpose- The purpose of this study is to examine the interaction between the change in the sustainability index and macroeconomic indicators in developing countries in order to be able to set forth the significance of the impact level of economic conditions on sustainability in the developing countries. Sustainability is a multidimensional concept that expresses not only sensitivity to environmental policies, biodiversity and climate change, but also corporate governance principles and human rights. Accordingly, socially responsible investment is a kind of investment considering not only financial criteria but also environmental, social and corporate governance factors as well. In today's world, both the increase in social chaos, disasters and epidemics all over the world reveal the importance of addressing the issue of sustainability at the institutional and even governmental level and taking urgent action. In this context, sustainability indices have been created in many international stock markets since the end of the 1990s, which are created according to various criteria. These indices follow the companies that comply with the concept of sustainability. Today, many developing country stock markets also have sustainability indices.
Methodology- The study employs panel data obtained from 7 developing countries, namely Brazil, China, India, Indonesia, Malaysia, South Korea and Türkiye for the period of 2015-2022. As the indicator of sustainability, annual percentage change in sustainability index of the related country is taken into consideration. Selected macroeconomic variables are economic growth, change in consumer price index, change in dollar based exchange rates and the ratio of current account balance-GDP. Within the scope of the subject, the importance of adapting to sustainability in the developing countries and the activities carried out are also discussed.
Findings- The analysis reveals that only changes in exchange rates and consumer price index have statistically significant effect on the change in sustainability index. Accordingly, while increases in exchange rates have negative effects, increases in consumer price index have positive effect on the sustainability index.
Conclusion- Despite the fact that countries have started to provide sustainability indices within their stock exchanges quite recently, and hence analysis had to be conducted by limited data, this study is expected to be among the first studies aiming to set forth the interaction between sustainability and macroeconomic conditions. Hence, this study is expected to make a significant contribution in the existing literature. Based upon the analyisis, it may be concluded that the policies should be implemented so as to compensate the negative effects of exchange rates. Furthermore, it should also be analysed more closely what the components behind inflation affecting sustainability in the selected countries, and the trigger behind these findings are.

Keywords: Sustainability, socially responsible investment, macroeconomic indicators, developing countries, panel data.
JEL Codes: C23, G15, Q50