key: cord-1021440-zf2me1sx authors: Bauer, Maira; Bulatenko, Mariya; Shimshirt, Natalia title: Development of corporate investment funds as a tool to achieve the goals of international treaties in the field of climate change date: 2021-10-05 journal: Int Environ Agreem DOI: 10.1007/s10784-021-09551-6 sha: 001ccf1e3d9503e2c234a7a2946a1a595098610d doc_id: 1021440 cord_uid: zf2me1sx The UNFCCC and Paris Climate Agreement set the environmental agenda for many years to come, making environmental protection a global trend. Herewith, these documents created many unprecedented challenges for business, shifting the focus from the original role of commercial benefit to the trade-off between profit and social responsibility. The need to adapt business strategies to the existing agenda has created new requirements for shaping the investment environment. In this aspect, there arises the question regarding the organizational and legal form the investment activities can be carried out in and what additional regulatory instruments can be applied to simplify the procedure for attracting environmental investments. In the current conditions, corporate investment funds may be considered as promising instruments for achieving the goals of international climate agreements. The study suggests that corporate investment funds can become an effective tool for attracting environmental investments. The study purpose is to assess the role of corporate investment funds in international climate agreements goals achievement, to consider the possibility of development strategies to improve management efficiency in the corporate investment funds in terms of their linkage to UNFCCC, Paris Climate Agreement and in a comparative perspective. The study methodology is based on the analysis of world and Russian law enforcement practices in the corporate activities field through the application of a systematic approach. The relationship between corporate governance represented by big businesses and the state is considered in the framework of the investment mechanism and the institutional environment, which is visualized in the model of the business landscape of a corporate investment fund in order to determine management strategies in the operation and development of a corporate investment fund. The study results can be put into practice by financial market participants and other entities in order to increase the efficiency of the use of assets and knowledge of national jurisdictions in the context of world and Russian practices. Over the past decade, there has been an active development of various types of sustainable financing on a global scale due to the growth in the number of investors and funds. Their activities are aimed at investing in environmental, social and management projects. Internationally (Norfund, 2020) , investments in clean energy, financial institutions, green infrastructure, scalable enterprises that meet the Sustainable Development Goals of the United Nations are being encouraged. The general global trend shows (Kanda, 2019) the developed markets of the USA, Great Britain, Canada, and Australia are dominated by the tendency toward the development of distributed ownership while in the emerging market countries, in particular in Asia, on the contrary, there is a tendency toward the development of concentrated ownership. The concept of distributed ownership (Maksimov, 2016) is defined as the distribution of separate property rights between a number of interconnected entities that can ensure complete implementation of the general package of property rights through their coordinated activities, and concentrated ownership (Amico, 2020) refers to large-stock corporations dominated by holding companies. Globally, the Asian market is currently one of the fastest growing stock markets both in absolute and relative terms. Thus, Asian non-financial companies accounted for 43% of the world's capital raised. The share of European and American companies declined over the same period and totaled 57%. However, today, there is a policy shift in the domestic markets of developing countries toward the development of the national economy, which is largely associated with the financial crisis caused by the COVID-19 pandemic (Kituy, 2020) . Therefore, in this context, cooperation between the state and business will be an important factor in the sustainable development of the national economy in order to rebalance finances toward economic growth based on investments in national infrastructure and meeting the needs of the population. This is the time when big business can demonstrate its potential by focusing not only on financial profit, but also on the national interests allowing the state to supply goods and services to meet the needs of the population, create jobs and influence sustainable development of the economy (Houérou, 2019) . Speaking about sustainable business conduct, the supranational initiatives, confirming the commitment of business entities to the ideas of sustainable development in this regard, are of particular importance. Achieving sustainable development both by an individual country and by the world as a whole is possible not only due to the implementation of responsible state policies by governments, but also due to the widespread introduction of the principles of socially responsible behavior in the business strategies of companies. One mechanism that motivates businesses to implement the principles of social responsibility in their business strategies is that of socially responsible investing. The purpose of this mechanism is to generate financial returns for an investor, promote positive social changes, reduce the negative environmental impact and comply with ethical standards. With more than half a century history of development abroad, socially responsible investment is quite new for Russia, and the spread of the practice of responsible investment is rather not intensive (Cherkasov et al., 2019) . In this regard, it seems relevant to define the essence of socially responsible investment, the system ensuring its development abroad, and regional specifics observed during its adoption in Russia to identify how meaningful and sustainable this process is in the context of the Russian economy (Kabir, 2017) . Russia ratified the Paris Climate Agreement 3.5 years after its adoption, that, in turn, was accompanied by different opinions on the advisability of ratifying the document. Thereby, the country adopted obligations to fight to reduce the volume of greenhouse gas emissions into the atmosphere and to modernize production in such a way that emissions become more environmentally friendly. In turn, this was reflected in the investment climate (Kulapin, 2019) . Environmental, Social and Corporate Governance (ESG) factors already influence capital markets and investment decisions of most institutional investors. Currently, there is no mandatory requirement on the part of investors to assess the ESG factors of companies when investing funds, most investors and investment fund managers accept them on a voluntary basis. Many foreign investment funds exclude from their investment portfolios or refuse to invest in company shares if these companies have low ESG ratings. Large Russian companies today recognize the need to improve their indicators in the field of sustainable development, at the same time, some of them have already lost certain shareholders due to the insufficient level of development of factors in the field of sustainable development. At the same time, according to representatives of the Russian business environment, Russian business fully accepts the fact that the task of risk management in the field of sustainable development dictates a new agenda, companies that do not pay enough attention to these risks will not be able to attract either European or American investors (National Association of Concessioners and Long-Term Investors in Infrastructure, 2019). For the first time, a responsible approach to investing (mainly in the form of exiting investments that do not meet certain ESG criteria and voting) was tested on fundamental investing strategies in stocks. The tendency to take ESG factors into account when analyzing stocks was formed already at the beginning of the twenty-first century, while for fixed income instruments this practice is still in its infancy, although it is confidently strengthening its position. This explains why the work on ESG integration for many asset owners and investment managers starts with investment portfolios and funds formed from stocks, and only then from instruments with fixed income (CFA Institute, 2019). The researchers note that legal institutions and regulatory bodies influence corporate finance and financial development creating private contractual relationships between the business and government. They found that management mechanism is location-based and highlighted the importance of corporate governance mobility to improve fund performance. They also identified the indicators of management sustainability at the fund level: high enterprise value, profit and sales growth. Jiang et al. (2018) found that an increase in the efficiency of investment funds depends on the power and participation of large shareholders in the fund. One of the important channels (Tran & Le, 2020) through which ownership affects the results of company performance is the economic behavior of a company that is associated with the investment choice. Williams and Farrell (2019) identified the following typical financial instruments: (1) equity or non-equity financing (for example, loans from shareholders or third-party financing) and (2) financing of joint ventures with mid-caps through bonds. Chen and Scott (2020) examined a corporate investment fund in different institutional environments. In particular, markets with a weak legal framework to protect investors' rights and markets with legal regulation to ensure high business activity. The researchers define a corporate investment fund as a capital owned by multiple investors who use it to purchase securities collectively (Chen & Scott, 2020; Cumming et al., 2017) . Broadly defined, an investment fund provides a wider range of investment opportunities, better management experience and lower investment fees compared to those that investors could get on their own. A company that manages the assets of investors is characterized as a company that publicly manages the assets of a fund in a specific geographic location within an established jurisdiction. This definition is in accordance with the legislation of countries in which traditions of investment activity have been established, for example, the USA, where this is regulated not only at the country level, but also at the state level. In general, one can state that most of the research on corporate governance and corporate investment has been focused so far either on the disclosure of the fund's activities or on the choice of a fund management model. The available studies did not analyze the structure of financial business, in particular, a corporate investment fund. Based on the above studies, the research attempts to investigate the management of corporate investment funds in the context of the development of investment mechanisms. The study describes a new vision of the approach within the framework of effective organizational, financial and institutional arrangements. The plan is to contribute to a better understanding of how public policies can enhance the economic contribution of ownership, as well as to identify a way to avoid policies that do not stimulate the growth of the country's wealth, which, in turn, affects the operation and development of the corporate investment fund. In addition, the study seeks to understand how the principles of social investing can positively affect the welfare of local communities under sound management policies. At the same time, the paper helps to determine the risks of choosing the wrong form of ownership and fund management model (i.e., how this process affects the coherence between the plans investors and top management have for corporate resources). The ability to navigate the fund policy selection can anticipate risks in advance and enable the organization of project processes in a way that leads to the desired result, both in developed and developing countries. The purpose of the study is to develop strategies to improve management efficiency in the development of corporate investment funds. The goal achievement algorithm is as follows: 1. To visualize a model of the business landscape of a corporate investment fund within the world practice framework; 2. To assess the role of corporate investment funds in international climate agreements goals achievement; 3. To define strategies for improving the efficiency of management in the development of corporate investment funds. Reaching those goals will move forward the scientific discourse on corporate investment funds in developing countries and their activities in the project context. Projects in question concern the environmental, infrastructure and social development of local communities. With the given strategy, companies will be able to perform investment activities under ethical principles and in compliance with the legal system of the host country. The use of these strategic measures can be a win-win both for environmental protection and for businesses involved in the project because investing in such projects reduces some potential cost items. In the long term, the above goals will contribute to the development of public-private partnerships, healthy competition and the better well-being of the local population. These implications align with the spirit of the United Nations Framework Convention on Climate Change and the Sustainable Development Goals. The study is based on an analysis of such international documents as the United Nations Framework Convention on Climate Change, Paris Agreement under the United Nations Framework Convention on Climate Change, United Nations Resolution, September 25, 2015: Transforming our world, the 2030 Agenda for Sustainable Development. Using the method of political and legal analysis, the work examines the genesis of responsible investment in the field of environmental protection from the point of view of its linking to global strategic documents in a comparative perspective. The work examines the current state and key challenges in the development of corporate investment funds in the Russian economy associated with its transition to a sustainable development model. The study describes an algorithm for the development and analysis of an action plan to improve management efficiency in the development of a corporate investment fund. The study contains comparative data and information on various national jurisdictions of developed and developing economies, including the USA, Japan, Germany, China, Russia and India, which are the largest economies in the world in terms of GDP, according to the World Bank survey (Hamadeh et al., 2020) . The analysis is described in 3 tables and 2 figures, in particular in chart 1, and covers a wide range of institutional, legal and regulatory provisions. The research relies on foreign (Celik & Isaksson, 2014; Kanda, 2019; Kituy, 2020; Norfund, 2020) and Russian (Roudiak et al., 2019) law enforcement practices in the field of corporate activities. The study is based on a systematic approach that considers the assets of a corporate investment fund in the framework of international and national law taking into account the optimization of corporate governance in order to develop strategies that cover functional and industry-specific issues related to the corporate investment fund development management. The methods of information collection, comparison, analysis and synthesis were used in the research. Investors in Europe and North America began to demand a positive rate of return and compliance with standards of corporate governance and multiple social, environmental and ethical criteria in the 1960s. In doing so, they developed a responsible approach to investing, which involves choosing where to invest based on ESG (environment, social, governance) factors (Kabir, 2017) . Responsible investment usually considers environmental, social and corporate governance perspectives in investment decisions in addition to profit. Investors engage in active dialogue with the management of investment companies to encourage change. Responsible investing is synonymous with socially responsible investing and sustainable investing (Sievänen et al., 2013) . As of 2018, more than US $ 30 trillion globally went to sustainable and green projects in the five main markets tracked by the Global Investors for Sustainable Development (GISD) Alliance, growing 34 percent in just two years. Nearly 400 investors representing over $ 35 trillion have signed the Climate Action 100 + to pressure major corporations. A group of the largest investors in the world with over US $ 2 trillion initiated the Net-Zero Asset Owner Alliance, committed to achieving carbon neutral portfolios by 2050 (Deloitte, 2020) . In 2019, influence investment funds were formed in the European financial market, as well as thematic funds related to specific issues of sustainable development, for example, solving the problems of climate change, health protection, poverty reduction, etc. Thus, the funds of the global fund of shares for responsible investment BMO SDG Engagement Global Equity Fund, the formation of which was announced in March 2019 by the Canadian financial group BMO Financial Group, was supposed to invest in the capital of small and medium-sized companies around the world that implement projects that contribute to achieving the goals of sustainable development of the United Nations. Also, funds with a climate agenda are being formed on the European market. The THEAM Quant Europe Climate Carbon Offset Plan, for example, specializes in investing in shares of European companies, taking into account their ESG ratings, as well as taking into account the companies' policies to reduce their carbon footprint. A similar investment strategy is the UBS Equities Global Climate Aware Fund, managed by the Swiss financial company UBS Asset Management, which invests in shares of companies implementing projects that contribute to the transition to a climate-neutral economy (National Association of Concessioners and Long-Term Investors in Infrastructure, 2019). Considering the issue of the development of corporate investment funds as an instrument of responsible investment from the standpoint of the goals of the latter, which are to determine and minimize the negative impact of the products of economic activity on the environment, it should be understood that these considerations have a direct relationship with the SDGs and the 2030 Agenda. The 2030 Agenda for Sustainable Development was adopted on September 25, 2015, by 193 UN member states. The document contains 17 global goals aimed at the optimal use of limited resources and the use of environmentally friendly technologies, the preservation of the integrity of biological and physical natural systems, the stability of social and cultural systems. At the same time, countries that have made global commitments independently develop and finance their own strategies, plans and programs for sustainable development (Lu et al., 2015) . As the EU expanded to include the countries of Central and Eastern Europe, there was a prejudice that its ability to adopt and implement environmental policies would be negative. CEE countries were expected to lag behind, slowing, weakening or even reversing progress in environmental policy development. However later, this prejudice began to collapse, as the newly acceding states did not show their consciousness in the application of advanced environmental practices and their commitment to meeting the trends associated with decarbonization and reducing environmental impact (Skjaerseth & Wettestad, 2007) . Similar prejudices regarding the above issues existed and to some extent still exist today and with regard to Russia. The Russian energy industry has historically followed the traditional path of development. The presence of large reserves of hydrocarbons (natural gas, oil and coal) and water resources has become a significant barrier preventing the promotion of safe and efficient alternative energy sources (Bayramov et al., 2021) . Also, until recently, there were no programs to support the renewable energy sector in the country (Proskuryakova & Ermolenko, 2019) . For a long time, Russian trade and industrial organizations did not pay attention to the problem of environmental protection. In particular, the issue of the development of such concepts of green logistics and marketing in trade has practically not been studied (Zaretskaya, 2015) . At the same time, it should be noted that despite the vastness of the existing Russian natural resource base, through the adoption of the Kyoto and Paris agreements to the UNFCCC, Russia has demonstrated its interest in reducing greenhouse gas emissions and adapting national legislation to international criteria in this area (Nukusheva et al., 2020) . The 2016 Foreign Policy Concept of the Russian Federation notes that the Russian Federation is in favor of expanding international cooperation in order to ensure environmental safety and counteract climate change on the planet, proceeding, first of all, from the importance of preserving and increasing the ecological potential of forests and based on the need to use the latest energy resources, and resource-saving technologies in the interests of the entire world community (Solntsev, 2018) . In 2020, Russia provided a Voluntary National Review of the Implementation of the 2030 Agenda for Sustainable Development, in which, among other things, it noted the fact that many Russian companies are introducing responsibility policies in the supply chain, making demands on suppliers and contractors for compliance with norms and standards in the field of environmental protection, industrial safety, labor protection, business ethics. For example, MTS PJSC has a Supplier Code of Business Conduct, which contains the minimum standards that suppliers are expected to comply with. In addition to being honest and fair, the Code emphasizes the importance of supplier compliance with environmental and human rights laws (Analytical Center for the Government of the Russian Federation, 2020). Progress in environmental finance is not possible without reforming and improving environmental policies, as spending must be driven by environmental priorities. Marketbased environmental policy instruments can be used as sources of funding (although their main purpose is to create appropriate incentives). Most importantly, environmental policy instruments should create incentives for private investment in environmental protection (Organization for Economic Cooperation and Development, 2007) . The peculiarity of environmental investments lies in their characteristics: they are aimed at the use, protection and reproduction of conditions for supporting and building up natural resource potential, as well as ensuring environmental safety; the object of environmental investments has a common character for many consumers and users, therefore the task cannot be solved by a separate business entity, region or country on its own; such investments should be made taking into account the properties of ecosystems or their individual components to self-regulation and self-healing (Pekovic et al., 2018) . The environmental investment market has shown significant growth in recent years. Based on responses from 209 impact investor organizations around the world, data from the 2017 Global Impact Investing Network (GIIN) Survey showed that half of the respondents pursued both social and environmental goals, while the rest 41% are primarily focused on social performance goals and 9% on environmental impact goals. Compared to the same 2016 survey of 158 impact investors, a 2017 study found increased interest in environmental investment: in 2016, only five percent of all respondents were primarily looking to achieve environmental impact (Lović Obradović, 2020). In terms of the level of development of green technologies, Russia lags far behind the countries leading in this direction. Russian green patents account for only 1% of the total market. Although there are noticeable advances: in 2019, Russia officially joined the Paris Agreement. There has been a trend toward an increase in demand and investment, primarily in solar energy, energy conservation and the development of electric vehicles, institutions for the development of an innovative economy are being created (Tykuchinsky, 2020) . In Russia, the state traditionally plays an important role in economic processes. At the state level, the national project "Ecology" is being implemented with a total cost of more than 4 trillion rubles. The goals of the national project are scheduled until 2024. As part of its implementation, new plans and laws are being adopted, the foundations of state policy in the field of ecology have been approved, and in 2019 alone, 0.5 trillion rubles of external funds were attracted. For the environmental sphere, such systematic support is especially important, since without a regulatory policy, the actions of economic actors tend to be more short-term planning than is required for the implementation of projects that bring a long-term positive effect on the environment (Tykuchinsky, 2020) . In the context above, the timeframes of economic efficiency remain a serious barrier to development in Russia. At the initial stage, the introduction of green technologies is quite costly, the increase in the company's profit and GDP growth must be assessed in the long term. Other constraints include deficiencies in legal regulation, the complexity of restructuring a bulky energy and transport infrastructure, and a shortage of qualified personnel (Porfiryev, 2018) . This aspect raises the question of what additional regulatory instruments can be applied to simplify the procedure for attracting environmental investments. Under the current conditions, the corporate investment funds can be considered as one of such instruments. In general, the degree of ownership in the distribution of capital and monitoring of corporate activities are the most important for the society. It is assumed that investors are interested in a return on invested capital; thus, they strive to find companies that have good future prospects. Metsger (2017) defines investment funds as specific corporations engaged in the business of investment where the models of classical corporate governance can be applied taking into account the qualifications of investors. The researcher outlines two classes of investors: (1) qualified investors, who can take risks in decision-making, select investment objects, as well as possess capital that meets those competencies and (2) unqualified investors, who do not have the competencies described above and the capital required. Taking into account the feature of the investment fund, Metsger highlights the essence of corporate governance, which is a reduction of the negative effects of the association and maximization of the positive ones on various participants. Roudiak et al. (2019) also relied on the terminology developed by the researcher and described two investment fund types: (1) institutions of joint investment (corporate investment fund), owned by a joint-stock company and exclusively engaged in joint investment; and (2) open-end funds, which are asset complexes, whose assets are managed by a specialized company in order to increase the value of their property. Note that neither an open-end investment fund nor a corporate investment fund is a legal entity. The legal framework supports this assertion. According to Article 2 of Russia's Federal Law on Investment Funds, a corporate investment fund is a joint-stock company whose exclusive scope of activities is the investment of property in securities and other assets stipulated by this Federal Law. Article 3 holds that the investment reserves of this fund shall be transferred to the trust management of a management company that meets the requirements. The US Investment Companies Act of 1940 (Code 5: Subclassification of Management Companies) states that an open-end investment fund is a management company, which offers for sale or has outstanding any redeemable security of which it is the issuer. Meantime, a joint-stock (corporate) investment fund is any management company that is not a mutual investment fund. The British legal system also has a definition of the term 'collective investment scheme' (UK Public General Acts, 2000) . An open-end investment fund is easier to administer compared to a corporate investment fund; however, investors do not have an influence on the operation of the asset management company while the asset management company of a corporate investment fund is controlled by investors. Krasnikova and Khamatkhanova (2018) define a joint-stock company as a type of associated ownership, in which the subject of appropriation is an association of owners in contrast to individual ownership. In practice, it manifests itself through the relations between shareholders and hired management. Gu (2018) examines the performance of investment funds in the context of a manager's experience. His research showed that managers with specialized experience outperform managers with diverse backgrounds. Patel and Sarkissian (2017) analyzed the structure of corporate governance of funds and revealed that funds managed by a team make a greater contribution to their industry performance, are less exposed to risk, and outperform funds with a single governance system. Funds run by three people can be effectively managed based on team governance. In this context, the role of management is to identify and implement an effective strategy. Cumming et al. (2017) examined the role of financial institutions in corporate governance. The effective development of corporate investment funds in the context of the development and implementation of typical corporate governance strategies requires the knowledge of the business landscape to which they will be applied. Thus, Fig. 1 describes the model of corporate investment fund operation recognized all over the world taking into account the types of investors and the asset management company where the ownership of investors is concentrated. Today there are four basic types of investors in the global market: institutional investors (41%), public sector owners (33%), private corporations and strategic individual investors (26%). Assets are managed by a management company, which is an official governing body (members appointed by the general meeting of shareholders of a corporate investment fund and designated for a period from 2 to 8 years), according to the methodological concept of the Organization for International Cooperation (Kanda, 2019). As shown in Fig. 1 , the quality of the corporate governance system in the country profile is critical to the dynamics and competitiveness of the business sector in the national economy. Trust between the business and the state is built within the established framework. Since corporations have a natural tendency to maximize current profits, government policies (standards, taxes, subsidies), as well as new opportunities for the development of "green" businesses, become incentives for the introduction of green technologies. Besides that, special research centers and foundations are being created, often with government support. Stock markets develop "green" indices to make it easier to channel resources toward environmentally sound companies, in some cases with the support of financial regulators. International experience shows that the development of green stocks and bonds indices can channel more private capital into green industries, as they facilitate the flow of green investment from institutional investors. Green stock indices typically cover a significant proportion of green businesses or track green growth performance for listed companies (Damianova et al., 2018) . Based on the world experience, control and compliance with the rules of corporate governance of asset management companies are carried out by state regulatory bodies. For example, in Germany, the Ministry in charge of corporate law is primarily responsible for the supervision and enforcement of corporate governance rules. In the USA, state law is the major source of corporate governance law, and the federal agency regulates certain governance issues on securities regulation (Securities and Exchange Commission). In some jurisdictions, the role of state regulatory bodies is limited to matters related to securities law as civil corporate governance rules are largely controlled and enforced privately. The basic regulatory law elements, namely laws and regulations of developed and developing countries, which have the largest economies in terms of GDP, are described in Table 1 . Table 2 shows the mechanism for the implementation of the major elements of the regulatory framework, namely laws, regulations, national codes and principles regulated by the state regulatory bodies, such as Securities and Exchange Commission, Central National Bank, Financial Services Agency, Ministry of Corporate Affairs / Ministry of Finance, Federal Office of Justice. In this context, government regulation aims to improve asset management. Internationally, there are three common governance systems ( Table 2): 1. One-tier system (board of directors / administrative body); 2. Two-tier system (supervisory board and management board share supervision and management responsibilities); 3. Hybrid system (the creation of an additional statutory body for audit purposes). The board usually consists of 5-7 members, but the number can vary from 2 to 17 members. Table 2 shows that one-tier systems are found in India and the USA. According to corporate law, the board of directors is responsible for business supervision and management. Two-tier systems operate in Russia, China, and Germany. In asset management companies, the supervisory board and the board of directors are appointed by the shareholders. Independent directors and a supervisory board act as the internal supervision mechanisms of the company. Hybrid system operates in Japan, which includes three types of models: A model that includes a board of directors (at least one executive director and there are also non-executive directors) and external auditors (a company board that audits the performance of directors); 2. A model with three committees, which includes directors and three committees (nomination, audit, remuneration committees). Each committee consists of three / or more directors; most of them should be external directors; 3. A model that includes a board of directors and an audit and supervision committee (consists of more than three directors; most of them are external directors). The committee has mandates similar to those of external auditors and the authority to participate in the election of the board of directors and remuneration at the shareholders' meeting. The policymakers of a corporate investment fund are responsible for the performance of the fund in order to meet the needs of the corporation. It is important to note that in order to support a dynamic business sector, it is necessary to adapt to the national specifics of the legal framework in which the business is conducted, as well as to the established international standards. The common goal of investors is to maximize risk-adjusted capital in order to develop and expand national market priorities. Thus, the use of a corporate investment fund can legally optimize business tax burden. Asset structuring based on the use of a corporate investment fund is described in Table 3 : The geographic target asset class by developed and developing countries is shown in Fig. 2 . Summarizing the sustainable development policy and cooperation between the state and business, it can be stated that investors in developed markets invest in infrastructure development (51.1%), and investors in emerging markets channel money into the creation of private equity fund (54.0%). Based on the investor's business activities, various strategies to succeed in private and public markets are used. The above shows that a typical strategy of the corporate governance model prioritizes investment in areas and sectors that need capital to create and develop a business in the national economy profile, which contributes to professional and effective business practice. Therefore, before making an investment decision, it is necessary to consider the impact of the project on market development and determine the retention period (long / or short period of time). To create a long-term effect, investment should be made only if the project is considered commercially viable; a short-term investment can be based on temporary participation in order to obtain growth potential in the form of income. At the same time, it is important to have a strategic ability to withdraw investments before the market growth potential has a negative effect on the members of the association. It is this strategy that will generate significant returns at acceptable risk highlighting the priority in three organizational areas: 1. Personnel who make financial and operational decisions to balance the growth and stability of the company within the framework of national jurisdiction and incomegenerating activities; 2. Financial management that involves cost management in the context of personnel and technology costs (the emphasis is on a remote workplace, outsourcing, and offshoring with due regard to the uncertainty of the external environment); 3. Internal audit aimed at meeting customer needs through the digitalization of the industry (Egorova et al., 2021) , which contributes to the development of an investment product. In addition, in practical terms, different jurisdictions contain rules for foreign persons and rules for ultimate beneficial ownership. The rules for foreigners are as follows: 1. Compliance with the state policy when investing in strategic business sectors within the framework of national law; 2. Foreign investors may have to comply with special tax rules if there are agreements on avoidance of double taxation between the investor and the fund states. The rules for ultimate beneficial ownership include disclosure of the information on ultimate beneficial owners in order to: 1. Obtain a regulatory permit for the joint venture; 2. Impose taxes (justification of reduced tax rates to the actual recipient of income); 3. Comply with the anti-corruption law; If the joint venture participates in tenders, a special focus is placed on public procurement tenders. Taking into account the principles of corporate governance described in the methodological concepts of international organizations (Hamadeh et al., 2020; Kay & Rowlands, 2020) , on the basis of which the model of the business landscape of a corporate investment fund is visualized, a step-by-step action plan for investors within the framework of incomegenerating activities through fund managers can be presented as follows: -Step 1 selection of a location for investment. There are a number of different legal structures and each jurisdiction has its own legal and regulatory framework. It is important to be aware of the requirements of jurisdictions in which the fund or management company operate; -Step 2 selection of an asset class. There is a wide range of asset classes in the market, from low-risk (bonds) to high-risk investment products (long position). Many investors prefer to keep several types of investment products in their portfolios; this minimizes their risk through diversification. A portfolio containing different types of assets will provide higher long-term returns; -Step 3 familiarization with the investor base. It is necessary to make sure that the fund is suitable for the intended investment whether they are institutional or retail investors, or their combination. The fund manager and investors should also take into account the securities and marketing laws and regulations in the fund's target jurisdictions. Responsible investment is focused not on short-term profit, but on long-term development, environmental protection and adherence to high social standards. Over the past few years, a large pool of investors has formed in the world who use non-financial indicators when making investment decisions. They are ready to refuse to invest in a company if it is environmental, social or management performance is low (Pekovic et al., 2018) . It is important to understand that social investments do not always provide the maximum market return. An investor who does not have sufficient financial literacy may not take this into account, and make an investment decision only on the basis that he understands high profitability as a "good investment." This is often used by the creators of "thematic" funds to sell their product. Therefore, it is important to properly inform customers about the features of the product so that they do not get disappointed in their expectations. Companies investing in environmental protection often focus on renewable energy (solar, wind, geothermal, etc.) , climate change and pollution control, including reducing carbon emissions, clean technologies, green building and improving efficiency, transport and water. A company's environmental awareness helps build a good reputation as an important factor for companies seeking to present themselves as good "social facilities" that do not pollute the environment. However, CEOs of companies investing in environmental protection feel a kind of ethical obligation that is not paramount (Pekovic et al., 2018) . Environmental investments are not only based on ethical principles, but are also aimed at increasing the company's bottom line. Accordingly, they can be a win-win for both the environment and business. Environmental investments reduce some of the potential revenue and cost channels. Government-funded environmental organizations propose projects aimed at generating profit by maximizing the available budget with minimal environmental impact. They offer investors the opportunity to get profit and change the world for the better. Guidance provided by organizations and foundations is intended for environmental managers to help them design projects, select delivery mechanisms, and rank competitive projects based on benefits and costs. The main goal is to help companies make better investment decisions to protect and improve the environment (Lović Obradović, 2020) . In this aspect, the question arises of in what organizational and legal form investment activities can be carried out and what additional regulatory instruments can be applied to simplify the procedure for attracting environmental investments. Under the current conditions, one of such instruments is corporate investment funds. As it can be noted, so-called green investments have become increasingly popular recently-investments in projects that make it possible not only to earn money, but also not to have a negative impact on the environment. Investment funds, in which investors' funds are accumulated for further profitability through their investment in the development of appropriate financial instruments, "green" projects, other companies that are related to environmentally friendly activities, are environmentally responsible and conscious. The green fund market is driven by pioneer countries such as France and major financial centers such as Switzerland and the UK (Checker & Kulinitch, 2019) . A green fund is a mutual fund or other investment mechanism that only invests in companies that are deemed socially conscious to conduct their business or that directly contribute to the development of social responsibility using standardized green assets. In Europe, green fund markets are dominated by pioneering countries in responsible investment, such as France, which is experiencing strong growth, or major financial hubs such as Switzerland and the United Kingdom. Most of the European green funds are equity funds, but the market is gradually diversifying, in particular due to the emergence of green bond funds in 2015 (Damianova et al., 2018) . The study compares fundamental legal and regulatory aspects related to the establishment and operation of a corporate investment fund in various jurisdictions with professional business activity. It should be noted that a corporate investment fund includes various investors, whose assets are mainly directed by the asset management company for the development of the national economy. Based on the economic goals of investors, it can be stated that with the help of the business activity of investors, three major objectives are expected to be achieved: preservation of capital; stabilization (they protect their capital from internal and external shocks by diversifying the list of investment products in the portfolio); economic efficiency (achieving positive returns). This is consistent with the conclusions made by Mudaliar et al. (2019) , who also indicate that the identity of investors lies in the fact that they invest in market areas to potentially get financial returns. And the current policy and national law in the country profile can create a favorable environment for this professional activity in order to achieve effective investments using public policy instruments. Policy instruments include tax incentives, increased capacity of investment projects, educational programs for new market entrants, creation of legal entities for investors, and standardized reporting on the impact of ownership and governance. In addition, the study examines a potential relationship between corporate governance effectiveness and institutional compliance at the macro level to try to explain the minimization of risk taking in accordance with concentration and performance. This finding is consistent with the argument that large investors encourage the management company to take risk by choosing a strategy. Kanda (2019) believes that competent management is an important means of creating a market environment and characterizes the stability and quality of the business, which contribute to the development of the capital market and ensure corporate access to equity capital for long-term production investments. Wei and Zhou (2020) found that separation of ownership and management is a feature of modern companies. This structure increases company efficiency, but can exacerbate the conflict between the investor and management. On the one hand, when there are many investors with different investment products in a corporate investment fund, corporate resources can be used to satisfy the interests of the top management of the company rather than to maximize shareholder value. However, in the countries with emerging capital markets, the structure of management companies is characterized by a high concentration of ownership, which is associated with the economic transformations within the country. Thus, large investors have the motivation and ability to control management. On the other hand, when large investors collude, they can reduce economic behavior for individual gain, which leads to a decrease in the long-term fund value. Compliance Solutions Strategies (CSS) experts (2020) identified the following motives for investments through fund managers: (1) a wide range of opportunities to invest in the local market areas and sectors; (2) the advantages of diversifying the investment portfolio; (3) access to opportunities in specific geographic locations; (4) efficient use of capital (no transaction costs). Muysken (2020) argues that corporate investment funds contribute to local economic development by financing local infrastructure, and identifies the following options for the use of a corporate investment fund: construction, holdings, dividends, structuring the sale of a business. Celik and Isaksson (2014) summarizes that these funds were established by states to stimulate the development of nationalist economies through investments in infrastructure and development projects, as well as by providing liquidity to finance commercial enterprises / research / developments. In addition, companies owned by institutional investors can gain privileged access to markets in the country/region where the fund is located. It is predicted that changes in asset allocation will be driven by investment objectives and liabilities of investors while the upward trend in private equity contributions will continue. Ultimately, the analysis performed in the study proves that each country can offer an attractive legal framework for investments that can be associated with a wide range of investment funds and are established in accordance with applicable legislation, tax regime, investment incentives, accessibility to foreign investors and fund registration procedures (Fund World, 2020) . Today the importance of capital is getting a less relevant issue compared to the strategy by which competitive advantages are achieved in rapidly developing markets under the conditions of uncertainty as evidenced by the COVID-19 pandemic (Henry & Stier, 2020) . The first objective that should be achieved to improve management efficiency in the development of a corporate investment fund is to meet customer demand in the face of changes in the global economy and national jurisdiction. To solve this problem, we have developed typical strategies covering the development of a corporate investment fund and the business activity of investors. The UNFCCC, and later Paris Climate Agreement, Agenda 2030, created many unprecedented challenges for business, shifting the focus from the original role of commercial benefit to the trade-off between profit and social responsibility. The purpose of any investment is to preserve and increase capital. However, the "era" of investments aimed solely at making a profit, without regard to the investment object, had ended and was replaced by the time of socially responsible investments, which allow combining the desire to obtain financial results with the will to invest in such a way that it brings a positive social effect. Responsible investing, if we consider this process on an international scale, is a clearly expressed trend, a dynamically developing process in which active changes are taking place. In this aspect, the question arises of in what organizational and legal form investment activities can be carried out and what additional regulatory instruments can be applied to simplify the procedure for attracting environmental investments. Under the current conditions, one of such instruments is corporate investment funds. The results of the study showed that corporate investment funds contribute to the nationalization of the economy through the cooperation between the state and big business in the framework of national and international law. It has been established that global markets and national jurisdictions tend to develop based on the use of investors' assets, which include stocks, real estate, intellectual property, loans and securities, in order to get positive returns and increase equity through income-generating activities of the corporate fund management company in the form of rentals, interests, dividends, royalties. It has been revealed that different types of investor assets are subject to regulation by the national jurisdiction in which the corporate investment fund is established. Thus, the decisions made in the field of the investor's business activity depend on the investor's knowledge of the market, financial goals and jurisdiction of the fund location area. Generally, it can be stated that in order to increase the efficiency of a corporate investment fund, on the one hand, it is necessary to attract sufficient investment capital and apply the priorities of three organizational areas: human resources, financial management and internal audit. On the other hand, there is a state policy that protects assets diversifying risks and losses based on national and international law. In practice, the research results can be used as a recommendatory guide on the key issues that arise in the business activity of an investor when seeking to invest their capital through a corporate investment fund. Given the fact that investment funds operate in multiple jurisdictions, regulatory knowledge of the corporate investment fund business landscape model will ensure a commercial advantage and minimize the risk of breach in the field of national jurisdiction. Further research should be focused on measuring the relationship between ownership concentration in emerging markets and fund performance. Funding This research did not receive any specific grant from funding agencies in the public, commercial or not-for-profit sectors. The authors declare that they have no competing interests. Data Availability Data will be available on request. 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