Directing capital to better drive sustainable value demands research that’s not only analytically rigorous but also practicable.
We recently spoke with leading investment practitioners for “Theory Meet Practice,” our video series about academic research into sustainable finance and the lessons investors can take from it. They shared with us what topics they would most like academic researchers to examine.
Engagement
- “I’m especially interested in the impact of corporate engagement on things like improved disclosure and transparency, better climate performance, operationalizing sustainability, and using sustainability as a value driver that may translate into lower cost of capital and better security prices,” says Paula Luff, director of sustainability research and engagement at DSC Meridian Capital.
- Though research recognizes that stewardship represents a channel of influence for investors, “I think there’s an opportunity for academics to go much further to really understand and examine the impact,” suggests Jason Mitchell, head of responsible investment research at Man Group and chair of the UK Sustainable Investment and Finance Association, “particularly around the cost of capital for companies across regions and sectors, as well macrostewardshp in a sovereign context.”
Public subsidies for private companies
- Aniket Shah, managing director and global head of sustainability and transition strategy at Jeffries, says he would like to see research into the impacts over the medium to long term of state subsidization of the private sector. “I think that the business community would benefit tremendously by knowing the long-term implications of having such heavy state support in a period of economic transformation,” he suggests.
A just transition
- Though a just transition — the idea that the shift to a low-carbon economy should factor in the people and communities that might lose out in the transition — represents a key principle of global climate goals, how might investors define it, asks Anne Simpson, Global Head of Sustainability at Franklin Templeton, who notes that investors are looking for research that can inform appraisals of risk. “Once we understand what the just transition is, then the next question is what matters to risk and return in the just transition, so that investors can play their proper role as fiduciaries,” she suggests. “Because we know that unless we can fulfill the ambition for a just transition, there’ll be no transition.”
Is there a question in sustainable investing you would like to see examined? Let us know here.
In the meantime, be sure to explore our Sustainability Research Portal, where we curate papers on sustainable investing that are notable for their practical investment relevance.
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