Green Financial Products

This bachelor’s thesis evaluates whether sustainable investment strategies using ETFs (exchange-traded fund) display different investment parameters when compared to their traditional counterparts. This thesis is split into two distinct sections. The first section covers the definition of ESG (environmental, social, and governance), the literature review, and the theoretical channels. The latter section primarily focuses on an evaluation of key investment parameters within passive sustainable investing and draws conclusions and suggests practical recommendations from the obtained results. For this analysis, Microsoft Excel will be employed. The primary source for the empirical analysis will be LSEG Workspace (formerly Refinitiv). In addition, the selected dataset will focus on the 2020-2025 period. Depending on the normality of the distribution of differences between ETF pairs, proxies for returns, volatility, and liquidity will be analysed using either a paired t-test or a Wilcoxon signed-rank test. The analysis suggests ESG-oriented ETFs exhibited statistically significant (at 5 % level of significance) unfavourable results primarily from 2021 onwards, with the only consistently favourable result occurring in 2020. Furthermore, the results also suggest an asymmetrical sensitivity of such assets to crises where the monetary-policy response resulted in rising or stagnating interest rates.