Quantitative Credit-Rating Models Including ESG Factors

Christoph Klein, CFA, CEFA, Dipl. Kaufm. Summary We constructed a discriminant function that includes an ESG factor. It has a higher explanatory power in discriminating between industrial companies’ good and poor credit qualities than similar models that don’t include an ESG factor. While empirical credit quality research has focused on “classic” credit ratios in the past, we find that adding …

Green Bonds: The Shape of Green Fixed-Income Investing to Come

Fixed-income securities that use their proceeds toward the financing of ESG-aligned projects have proven particularly attractive among investors. Their volume has been increasing exponentially since their inception by the European Investment Bank (EIB) in 2007 and following their expansion by the International Finance Corporation (IFC) in 2010.

For this special issue, we looked for articles that explore the extent to which sustainability-linked and ESG-aligned fixed-income securities can support the mainstreaming of responsible investment principles across the financial sector.

Riding the Waves of the Blue Economy: Implications for Impact Investors

Jens Christiansen, MsC; PhD student, Lancaster Environment Centre, Lancaster University, UK Marleen Schutter, MsC; PhD student, Lancaster Environment Centre, Lancaster University, UK Ocean ecosystems around the world are increasingly impacted by coral bleaching, pollution, and declining fish stocks (Allison and Bassett 2015; Hughes et al. 2017). Simultaneously, oceans are seen as development frontiers, offering opportunities for growth and attracting the …

ESG Risk Factors and Tail-Risk Mitigation

        Zsolt Simon, MSc; PhD candidate Risk and Performance Analyst at Bank J. Safra Sarasin, Switzerland Chiara Legnazzi, PhD Risk and Performance Analyst at Bank J. Safra Sarasin, Switzerland Disclaimer: This article is research in progress representing the opinions of the authors only as per the date of writing and may be changed at any time without notice. Neither the …

Corporate Social Responsibility and Firm Outcomes: Some Intuition on Interpreting Statistical Models

A Comment on “ESG Risk Factors and Tail-Risk Mitigation” E. Mark Curtis, PhD Assistant Professor, Department of Economics, Wake Forest University In recent years there has been a push from investors, activists and consumers to obtain more information on the sustainability practices of the companies in which they invest and from whom they purchase goods and services. As such, a …

Beyond Intrigue

William H. Page, MBA Portfolio Manager, Essex Global Environmental Opportunities Strategy (GEOS)       Since we launched the Global Environmental Opportunities Strategy (GEOS) at Essex Investment Management over six years ago, we have been constantly reminded by industry peers, prospects, friends, and family that we are “very well positioned.” My co-manager, Rob Uek, and I frequently laugh that we would …

Balancing Corporate Values with Investor Demands

The Challenges of Industry-Led Scaling of a Low-Carbon Power Supply Parker Liautaud Abstract The private sector is under increasing pressure to address the financial risks of climate change. At the same time, opportunities for low-carbon economic growth are becoming more attractive to potential investors, especially in scaling up renewable energy (in particular, solar and wind power), retrofitting coal power plants …

On Socialism, Price, and Sustainability

  Todd Cort, BS, MS, PhD Yale School of Management and Yale School of Forestry and Environmental Studies       Juan-Victor Seminario, BA, MBA, MAM  WaterAid America       Why did socialism fail? Apologies to those in Venezuela and Cuba, but I refer to the grand experiments in socialism undertaken by the Soviet Union and China. In both …