Business and Economic Horizons

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Volume 16
Issue 2
Title Evaluating Investment Fund Sustainability via New Fuzzy Approach // Article in press
Author Zuzana Jankova, Petr Dostal
Abstract
Following the global financial crisis, environmental, social and governance (ESG) components are gaining a key aspect of sustainable development for investment decisions on the stock market. The ESG considers investment aspects related to sustainable return, risk reduction and liability. We propose a new approach to the fuzzy model used to support decision-making, which allows investors to consider not only economic performance when investing funds, but also to include environmental, social governance (ESG) scores in the investment decision-making process. We will create a model that allows investors to consider economic performance and ESG components as part of the investment fund in investment decision process based on the new type-2 fuzzy logic (IT2FL) approach, which is able to include additional uncertainty resulting from unclear, uncertain or inaccurate data. The study deals mainly with the evaluation and comparison of different degrees of uncertainty of the functions of the membership of input variables. Several model situations with different levels of inaccuracy are created. Experimental results show that the proposed model offers promising results for socially responsible investors seeking ethical and sustainability goals in combination with the economic performance of investment funds. We offer an alternative view of the evaluation of the ESG components compared to traditional statistical methods.
Citation
Keywords ESG, fuzzy logic, investment funds, IT2FL, soft computing, stock market, sustainable investment, sustainability
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