10th video

Question 1

GSIA? Eurosif?

Answer 1

GSIA (Global sustainable investment aliance): collaboration of membership-based sustainable investment organisations around the world

Eurosif: European association for the promotion and advancement of sustainable and responsible investment across Europe.

Question 2

Amount of global sustainable investment at ____ dollars

____% of total assets under management are sustainable investment

Sustainable investment negative growth of ___% in 2018-2020

Sustainable investment highest % growth in 2018-2020

proportion of global sustainable investing assets by region 2020
48% was in ____
and 34% was in ____

Answer 2

1: 35.3 trillion dollars in 2020 (with US being a leader now 17 trillion vs 12 in Europe)
2: 35.9%
3: Europe
4: Canada 48%, US 42%, Japan 34%
5: United States and Europe

Question 3

Which country has the highest proportion of sustainable investing assets relative to total managed assets (2020)

Answer 3

1. Canada 61.8%

Question 4

Name sustainable investing assets by strategy & region 2020 list .55 list of 7

Answer 4

1. ESG integration
2. Negative/exclusionary screening
3. Corporate engagement and shareholder action
4. Norms-based approach
5. Sustainability themes investing
6. Positive/best in class screening
   7 (Lowest) Impact investing

Question 5

% wise, United States has highest % in which investing strategy, and in which does Europe lead?

Answer 5

United States leads in sustainability themed investing 86%

Europe lead in Norms-based screening 74%

Question 6

Institutional vs retail investors % in 2014 and 2020

Answer 6

86.9% in 2014 was institutional

in 2020 it was 75% institutional and 25% retail

Question 7

Global sustainable investing asset allocation 2018.
% in Public equity and fixed income?

Answer 7

Public equity - 51%
Fixed income - 36%

Question 8

Principles for responsible investment (PRI) meaning and mission? .63

Answer 8

PRI: international network of investors working together to put the principles related to sustainable investment into practise

Mission:
–understand the investment implications on environmental, social, and governance (ESG) factors
–to support its international network of investor signatories (a party that has signed an agreement) in incorporating these factors into their investment and ownership decisions

Negative screening, integration, individual engagement are the most common responsible investing strategies among principles of responsible investment (PRI) signatories

European PRI signatories: more screening
US and Asia Pacific PRI signatories: more engagement

Question 9

How does ESG impact the financial performance of firms and investors? .2

Answer 9

Evidence seems inconclusive, contradictory, and ambiguous

Opinions differ dramatically across academics and practitioners about whether ESG will help or hurt financial performance of firms and investors

Question 10

Why and how would ESG impact stock valuation? .3

Answer 10

• More sustainable firms may have lower exposure to systematic risk
• Investors may have preferences for holding green companies
• ESG might provide hedging against (climate) or other risks
• Customers might be willing to pay higher prices for products and services of more sustainable firms
• Employees more productive or willing to work for lower pay
• Implementation good ESG issues might be costly
• High ESG firms less wasteful or better governed.

Question 11

What is said in studies (by academics) in examining a relation between financial performance and ESG? .6 and .7

Friede et al (2015 paper)

Answer 11

62% positive relation
30% mixed/no relation
8% negative relation

Question 12

Portfolio studies? Non-portfolio studies? .8

Who shows more positive findings between ESG integration and financial returns.
Friede at al 2015

Answer 12

Portfolio studies: examine whether risk and return characteristics of portfolios depend on ESG measures (compare differences between ESG and traditional mutual-funds)
-Portfolio studies show low level of positive findings and a high level of mixed feelings
-This type of study (when examining non-ESG and ESG mutual funds)is tricky, because it mixes management fees, skill of the fund manager, the investment approach. So, it introduces noise.

Non-portfolio studies (firm level): examine directly whether there is a link between firm variables and ESG measure. (use direct firm data. does return on equity/assets depend on ESG metrics)
-Non-portfolio studies show more positive findings (57% positive relation)