Comparing the resilience of socially responsible and SIN investment during the COVID-19 pandemic

This study analyses the performance dynamics of socially responsible investment (SRI) and SIN investment exchange-traded funds (ETFs) during the COVID-19 pandemic in the United States. Utilising a GARCH methodology, the research examines ETF returns while considering significant COVID-19-related events to assess their impact. The study diverges from the conventional narrative of SIN stocks’ superiority by illustrating the resilience and outperformance of SRI ETFs in terms of returns and volatility stability during the pandemic. This finding challenges previous assertions in the literature and suggests a potential paradigm shift in investment strategies during periods of global crisis. The results underscore the importance of integrating Environmental, Social, and Governance (ESG) factors into investment decisions, especially in turbulent times. This study offers investors actionable insights into the benefits of SRI ETFs, demonstrating their ability to provide stable returns and reduced risk during economic downturns. Fund managers can leverage these findings to align their portfolios with ESG principles, enhancing resilience against future crises. Policymakers can also draw on this evidence to promote sustainable investment frameworks that support long-term financial stability. Overall, this study contributes to the evolving discourse on sustainable investing, positioning SRI as a viable approach that balances financial performance with societal impact. • SRI ETFs outperform SIN in COVID-19 era: a paradigm shift in investment. • COVID-19 pandemic highlights resilience and superior returns of SRI ETFs. • Study challenges traditional resilience of SIN stocks, elevating SRI investments. • Integration of ESG factors key to investment success during global crises. • Research signals shift towards policy focus on ESG’s financial impact.