1.

What might induce a firm to invest more in green than brown? Since 2016, “green” firms have had a perceived average cost of capital 1 full percentage point lower, on average, than their “brown” counterparts. That’s according to Niels Joachim Gormsen, Kilian Huber and Sangmin S. Oh in their paper “Climate Capitalists,” which won the 2024 Moskowitz Prize for sustainable finance research. The researchers — Gormsen and Huber of the University of Chicago and Oh of Columbia University — analyzed U.S. and European earnings calls (2022-2023) and MSCI environmental scores to categorize firms as green or brown. Their analysis suggests that the rise of sustainable investing may have contributed to shifting capital allocation toward greener investments through lowering companies’ perceived cost of capital for green investments — not just across green and brown firms but between green and brown projects within firms as well — ultimately helping to reduce carbon emissions.

Read here.

2.

“Drill, baby, drill” may dominate headlines, but “the clean energy revolution is being driven by fundamental technological and economic forces that are too strong to stop,” write Oxford professors Eric Beinhocker and J. Doyne Farmer in a Wall Street Journal op-ed: “The Clean Energy Revolution is Unstoppable.” Like past innovations such as mobile phones and railroads, clean technologies grow exponentially from a small base, with falling costs accelerating adoption. Take a look at their charts comparing trends in energy costs and power generation — they punctuate the authors’ point that “the energy transition is a one-way ticket.”

Read here.

3.

It feels like “Flow,” which recently won the Oscar for best animated feature, arrived just in time. The action-packed but dialogue-free film by the Latvian director Gints Zilbalodis follows the journey of a group of animals who, with some reluctance, help one another find safety after a flood. Not to get too sentimental (I promise the film is not!), but the story makes you think about some of the defining questions of our day. Individualism and society. Disaster and migration. The fragility and strength of the social fabric. “We are all in the same boat and must overcome our differences to find ways to work together,” Zilbalodis said in accepting his award.

Watch the trailer here.

4.

While the animals in Flow must flee a single disaster, the cost of chronic physical risk like rising temperatures may be larger than acute effects over time. This reminds me of research published last year by Sylvain Leduc and Daniel J. Wilson at the Federal Reserve Bank of San Francisco, who find in “Snow Belt to Sun Belt Migration: End of an Era?” that Americans’ concern with extreme heat seems to have curtailed seasonal migration from the North and Midwest to the South and Southwest, disrupting and even reversing a decades-long pattern. Incidentally, the researchers learned this by examining detailed county-level data on average daily temperatures from the U.S. National Oceanic and Atmospheric Administration (NOAA), which has compiled such data since 1895 (!!) — a reminder of the tremendous value of collecting a long and consistent data history. We all rely on data from NOAA and other U.S. government agencies to advance our collective knowledge and make better decisions on how to allocate capital at the household, corporate and policy levels.

Read here.

5.

It’s the season when companies hold their annual meetings, where shareholders vote for directors to oversee management on their behalf. In “Women on Boards and Beyond: 2024 Progress Report,” MSCI’s Christina Milhomem and Moeko Porter present the latest data on board composition, which matters to investors who count on corporate boards comprising a mix skills, experience, and personal characteristics to guide their companies through a changing landscape. The latest? It’s good news that companies seem likely to find men at least as qualified as women; the report finds that nearly 37% of male directors at listed companies globally had financial expertise, compared with nearly 40% of their female counterparts, as of October 2024. Female directors are in high demand—nearly one in four served on two boards, compared with fewer than one in five of their male counterparts—and experience higher turnover. Meanwhile, racial and ethnic representation on corporate boards has ticked up in both the U.K. and U.S., though disclosure among U.S.-listed companies remains limited.

Read here.

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