(Newsletter #7) Climate Change: Changing Finance
Although the financial players have begun to change in response to the urgent need to tackle climate change, they are far from doing so quickly enough and to the right extent. But how can they be supported and equipped? This month, the new issue of the #EDHECVox newsletter, our professors and researchers present their thoughts and concrete proposals on this subject.
Almost every week, the media carry reports, petitions and actions aimed at analysing - and often denouncing - the role of banks in climate change.
Banks do indeed play a key role, either positively or negatively, depending on their financing choices. But many other private players in the financial industry are involved and influential: institutional investors, pension funds, investment service providers, asset management companies, etc.
One key point concerns them all: although the financial players have begun to change in response to the urgent need to tackle climate change, they are far from doing so quickly enough and to the right extent. But how can they be supported and equipped? This month, our professors and researchers present their thoughts and concrete proposals on this subject.
Don't forget that all these articles are available in French on edhec.edu, and if you haven't yet signed up to receive the EDHEC Vox monthly newsletter: follow this link.
Happy reading!
“Dark green” equity funds could go “full green” with very limited impact on their risk profile
By Aurore Porteu de La Morandière, Benoit Vaucher and Vincent Bouchet – respectively ESG & Quant Researcher, Director of Research and ESG Director at Scientific Portfolio, an EDHEC Venture
The number and the weight of sustainable investment funds has increased rapidly in the last decade. To avoid greenwashing risks, the regulatory and political environment is getting more and more stringent. However, many “sustainable funds” still contain stocks of companies involved in questionable industries, like coal or oil. So, what is the impact of these controversial stocks on the risk profile of these funds? Can their holding in sustainable funds be justified? Do climate-related exclusions have an effect on portfolio risk? These are the questions that researchers from Scientific Portfolio (an EDHEC Venture) explored in their latest study… Read this article
Felix Goltz (Scientific Beta): "Integrating climate risk considerations into portfolios is a key concern of institutional investors around the world"
An interview with Felix Goltz – Research Director at Scientific Beta
The interviewee discusses the integration of ESG (for "Environment, Social, Governance") in factor investing, the pivotal role of academic research and the important insights gained over the years, as well as the strategic shifts in research themes to meet investors' evolving needs. He also evokes the rationale behind Scientific Beta's climate index series, and the Scientific Beta and EDHEC-Risk Climate Impact Institute research chair established recently to further research into climate risk modelling… Read this interview
A Conversation with Robert Litterman (Kepos) and Riccardo Rebonato (EDHEC): Fighting Climate Change Through Financial Innovation
An interview with Robert Litterman – founding partner of Kepos Capital and co-developer of the Black-Litterman Global Asset Allocation Model, and Riccardo Rebonato – EDHEC Professor and EDHEC-Risk Climate Impact Institute Scientific Director and Programme Director
What is the influence of financial markets on climate strategies? How can innovative financial instruments drive the sector forward in the fight against climate change? The two interviewees discuss the many ways finance could do better for climate as "private investment is critical to achieving the scale and speed required for effective climate change mitigation"… Read this interview
Climate change: Why are infrastructure investors aware of the risk while failing to measure it?
By Noël Amenc – EDHEC Associate Professor and Climate Policy Coordinator, Frédéric Blanc-Brude – EDHEC Infra & Private Assets Director, and Alice James – Communications consultant for EDHEC Infra & Private Assets
In a new report, researchers from the EDHEC Infrastructure & Private Assets Research Institute state that an overwhelming majority of investors consider, on one side, that climate risk will have a highly significant impact on their infrastructure investment. But, on the other side, they say that a lack of essential data leads to the fact that global investors do not know how to gauge – or manage – the risk that climate change poses to their portfolios. These results are based on an ambitious survey, which polled 70 investment industry professionals including managers of more than US$2 trillion of assets… Read this article
(NL#3) Climate and Finance: is it now, or right now?
Last January, in the 3rd EDHEC Vox newsletter, our professors took a stand: the essential transitions in our economies and societies cannot be made without the financial sector. Why is it a two-way street? What role are researchers already playing? What would a genuine sustainable finance look like, and why are education, research and collaboration the pillars of it? EDHEC Business School is committed to actively contributing to this transformation... Read this newsletter
To read the previous issues of the #EDHECVox newsletter :
- (#6) Leading without misleading - follow this link
- (#5) Is it enough to understand our mutual challenges to be able to address them? - follow this link
- (#4) Without a collective approach, can we (really) combat our individual vulnerabilities? - follow this link
- (#3) Climate and Finance: is it now, or right now? - follow this link
- (#2) Circular economy: Why are we wasting time? - follow this link
- (#1) Greener, chattier, more connected… How do companies address "new" customers? - follow this link
Illustration (header) 2024 - Anne Moreau
