Scientific Beta “Upgrading Climate Scenarios for Investment Management”
Presentation of the Partner
About Scientifc Beta
Scientific Beta aims to be the first provider of a smart factor and ESG/climate index platform to help investors understand and invest in advanced factor and ESG/climate equity strategies. Established by EDHEC-Risk Institute, one of the top academic institutions in the field of fundamental and applied research for the investment industry, Scientific Beta shares the same concern for scientific rigour and veracity, which it applies to all the services that it offers investors and asset managers.
On January 31, 2020, Singapore Exchange (SGX) acquired a majority stake in Scientific Beta. SGX is maintaining the strong collaboration with EDHEC Business School, and principles of independent, empirical-based academic research, that have benefited Scientific Beta's development to date. Since 2015, Scientific Beta has also been offering highly advanced strategies in the area of ESG and climate change, whether involving options integrated into smart beta indices or pure ESG or climate benchmarks.
As a complement to its own research, Scientific Beta supports an important research initiative developed by EDHEC on ESG and climate investing and cooperates with V.E and ISS ESG for the construction of its ESG and climate indices.
Presentation of the Partnership
Objectives
Jointly endowed by EDHEC Business School and Scientific Beta, the “Upgrading Climate Scenarios for Investment Management” research chair at the EDHEC-Risk Climate Impact Institute aims to address the pressing need for specialised tools to integrate climate risks into investment management.
Climate change is becoming increasingly tangible, manifesting in more frequent and severe extreme weather events, but the majority of the resulting damage to nature, people, and economies is yet to come. This renders historical data and traditional statistical estimation methods largely irrelevant for assessing and managing climate risks. Consequently, climate scenario analysis and stress testing have become central components of the investor toolbox.
In their current state, these tools are primarily crude what-if instruments designed to aid long-term strategic thinking about uncertainty and identify vulnerabilities to potential shocks. Substantial work is needed to enhance and adapt climate scenarios for risk and investment management purposes. The critical challenge lies in embedding scenario analysis within a coherent probabilistic framework, enabling finance professionals to compute relevant risk and return metrics.
Professor Riccardo Rebonato, Scientific Director at the EDHEC-Risk Climate Impact Institute, leads this research effort. A nuclear physicist by training, he has made significant contributions to quantitative portfolio theory, risk modelling, and management, and has held senior research positions in the financial industry.
[Press release announcing the launch of the research chair: 02/10/23]
- EDHEC Outputs
How Does Climate Risk Affect Global Equity Valuations? A Novel Approach, July 2024, EDHEC-Risk Climate Publication
Riccardo Rebonato, Dherminder Kainth, Lionel Melin
Press release announcing the publication of the research: 10/07/24
- Academic Outputs
The Impact of Physical Climate Risk on Global Equity Valuations, SSRN
Riccardo Rebonato, Dherminder Kainth, Lionel Melin
- Professional Outputs
What is the Impact of Physical Climate Risk on Equity Valuation?, Presentation held on December 11, 2024 at the Green Finance Research Advances (GFRA), co-organised by Institut Louis Bachelier and Banque de France, with the participation of the Institut de la Finance Durable and the Institute for Climate Economics -I4CE.
Speaker: Riccardo Rebonato
The Impact of Climate Change on Equity Valuation, Presentation held on November 27, 2024 at the Scientific Beta Days Europe 2024 conference, organised by Scientific Beta.
Speaker: Riccardo Rebonato
What is the Impact of Physical Climate Risk on Equity Valuation?, Presentation held on September 26, 2024 at the 20th Quantitative Finance Conference, organised by World Business Strategies.
Speaker: Riccardo Rebonato
Sizing Up the Climate Threat to Global Equity Values – A Novel Approach?, Feature originally published in the July newsletter of the Institute.
Riccardo Rebonato
Assessing the Impact of Climate Risk on Global Equity Valuations, Webinar held on July 2, 2024.
Speaker: Riccardo Rebonato, Moderator: Felix Goltz
How can strategic investors deal with climate uncertainty?, article originally published in the Spring 2024 issue of EDHEC Research Insights published in Investment & Pensions Europe supplement and Pensions & Investments supplement.
Riccardo Rebonato
Interview: Climate Risk Integration: A Global Investor Concern, published in the February 2024 newsletter of EDHEC-Risk Climate Impact Institute. In this interview, Felix Goltz discusses the integration of ESG in factor investing, the pivotal role of academic research and the important insights gained over the years, the strategic shifts in research themes to meet investors' evolving needs, the rationale behind Scientific Beta's climate index series, and the Scientific Beta and EDHEC-Risk Climate Impact Institute research chair established recently to further research into climate risk modelling.
About EDHEC
Operating from campuses in Lille, Nice, Paris, London and Singapore, EDHEC is one of the world’s top 15 business schools. Fully international and directly connected to the business world, EDHEC commands a strong reputation for research excellence and the ability to train entrepreneurs and managers capable of breaking new ground. EDHEC functions as a genuine laboratory of ideas and produces innovative solutions valued by businesses. The School’s teaching is inspired by its research work and a focus on “learning by doing”, all with the aim of equipping people with the skills to succeed in business.
