Sustainable finance : divestment as a tool to reach the SDGs?

This paper synthesizes the literature on sustainable divestment. Nowadays, divestment seems to be a popular strategy to sanction harmful industries or socially not desired outcomes of economic activities. However, in practice for a long time many firms which were known for harmful technologies did not face divestment or a loss in value. Seminal theoretical work was done by Heinkel et al. (Heinkel, Kraus, & Zechner, 2001). Recent theoretical studies based on this approach show that divestment has huge limitations. Theory explains that "voice" (engagement in the company) is superior to "exit" (divestment). Nevertheless, the divestment movement and campaigns are of considerable social size. The effects of divestment on the financial market seems to be small in monetary terms. However, there are a lot of side effects, such increasing social awareness concerning the wasteful lifestyle. The divestment movement is gaining importance and actors. Therefore, the divestment movement is a supporting tool to reach SDGs. Not directly via the impact on the financial market, but by raising the social awareness.