An independent think tank that conducts and disseminates research on ESG and finance

MSCI: Out of Whack – U.S. CEO Pay and Long-term Investment Returns

Last year, MSCI asked whether pay packages given to U.S. chief executive officers reflected long-term shareholder returns and found they did not.1 The bottom fifth of companies by equity incentive award outperformed the top fifth by nearly 39% on average on a 10-year cumulative basis. That study looked at awarded pay — of which 60%-70% [...]

By | October 6th, 2017|New research|0 Comments

MSCI: Funds for 2.7 trillion USD in Net Asset Value are exposed to Asset Stranding risk

A confluence of regulatory and non-regulatory factors is driving the adoption of renewable energy and other clean energy technologies globally, while headwinds facing fossil fuels continue to mount. Measuring how one’s investments are positioned relative to this transition towards a low carbon economy can help the end investor understand what long-term bets – intended and [...]

By | September 20th, 2017|New research|0 Comments

Investment Professionals’ Use of Corporate Social Responsibility Disclosures

We conduct an experiment to examine investment professionals’ use of corporate social responsibility (CSR) disclosures when making personal investment decisions or investment recommendations to clients. We predict and find that investment professionals are more willing to personally invest and recommend investment to a client when a firm discloses positive CSR performance than when it makes [...]

By | September 1st, 2017|New research|0 Comments

Corporate Environmental Policy and Shareholder Value: Following the Smart Money

We examine the value consequences of corporate social responsibility through the lens of institutional shareholders. We find a sharp asymmetry between corporate policies that mitigate the firm’s exposure to environmental risk and those that enhance its perceived environmental friendliness (“greenness”). Institutional investors shun stocks with high environmental risk exposure, which we show have lower valuations [...]

By | September 1st, 2017|New research|0 Comments

UNGC Canada: Designing an anti-corruption compliance program

The 10th Principle of the UN Global Compact states, “Businesses should work against corruption in all its forms, including extortion and bribery.” Corruption, as the Global Compact recognizes, is corrosive to local communities, hinders economic development and perverts free markets. It is a driver of poverty and conflict, and is directly antithetical to the rule [...]

By | August 30th, 2017|New research|0 Comments

ESG Risks and the Cross-Section of Stock Returns

This paper studies the effect of ESG risks on shareholder value, using data from RepRisk to measure the risk exposure of a firm to ESG incidents. A firm has high ESG risks when it had many ESG incidents in the past. This paper shows that a portfolio of these firms generates negative stock returns over [...]

By | July 18th, 2017|New research|0 Comments

Bank of America: ESG is the best signal we have found for future risk

Environmental, Social & Governance (ESG) factors are too critical to ignore, in our view. In our earlier report ESG: good companies can make good stocks, we found that ESG-based investing would have offered long-term equity investors substantial benefits in mitigating price risk, earnings risk and even existential risk for US stocks – ESG would have [...]

By | July 2nd, 2017|New research|0 Comments

Bloomberg and the TCFD – final recommendations

“Increasing transparency makes markets more efficient, and economies more stable and resilient.” —Michael R. Bloomberg, Chair of the TCFD To help identify the information needed by investors, lenders, and insurance underwriters to appropriately assess and price climate-related risks and opportunities for the companies, the Financial Stability Board established an industry-led task force: the Task Force [...]

By | June 29th, 2017|New research|0 Comments

To Disclose or Not to Disclose Climate-Change Risk in Form 10-K – Materiality and Cost of Equity

We examine the relation between managers’ decisions whether to disclose climate-change risk (CCR) in Form 10-K and firm risk. Ambiguity about the materiality of CCR and the SEC’s inconsistent enforcement of CCR disclosures cause uncertainty about whether disclosing CCR is mandatory or voluntary. We hand-collect data over a seven-year period from about 3,000 Form 10-K [...]

By | June 28th, 2017|New research|0 Comments

IFAC calls for integrated reporting

The International Federation of Accountants® (IFAC®) is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC now calls for integrated reporting: “Leaders need to choose between two separate paths. In one direction lies renewed vigor for working [...]

By | June 28th, 2017|New research|0 Comments