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When asset managers are criticised for the vast greenwashing happening in financial markets (Amenc et al., 2021), the answer often is that greenwashing is only an issue for passive investments while active strategies – particularly, active ownership – can fix all the problems. Investors preoccupied with climate change can be "active owners" and influence investee companies' carbon footprint by voting at shareholder meetings on climate-related issues and by actively engaging with executives and board members. We study to what extent institutional investors' ownership affected corporate carbon emissions in 68 countries for the period of 2007 to 2018 finding that institutional investment on average does not appear to lead to any tangible carbon footprint reduction.
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Almost every year since 2006, EDHEC has conducted a survey on European professional investors' views and uses of ETFs, as part of the Amundi research chair at EDHEC-Risk Institute. Our survey also investigates investor use of smart beta and factor investing strategies and focuses on investor interest in ESG investing, both in the context of ETFs and smart beta and factor investing strategies. The EDHEC European ETF, Smart Beta and Factor Investing Survey 2021 targeted institutional investors, as well as asset management firms and private wealth managers. Our 202 respondents, of whom 81% use ETFs, were high-ranking professionals within their organisations. The notable results of this year's survey were a slowdown in the use of smart beta and factor investing strategies, and a growing interest in the integration of an SRI/ESG component into investment. |
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Interview |
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In this interview, we talk to Irene Monasterolo, Professor of Climate Finance at EDHEC Business School and EDHEC-Risk Institute, about the reasons behind her decision to join EDHEC, climate change which represents a new type of risk for economic and financial stability, the climate stress-test of the financial system she co-developed, her recent participation in a COP26 side-event on the cascading impacts of natural disasters and her current and future research projects. |
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In this study, conducted with the support of Bank of America, the authors demonstrate that accounting for long-term care risk reduces the optimal demand for annuities, thus suggesting that the opportunity cost inherent in the expensive reversibility of annuitization decisions can help explain the annuity puzzle, i.e. the lower-than-expected demand for annuity products. They also find that the introduction of annuity products with upside potential and goal-based investing strategies securing minimum levels of replacement income has a positive impact on investor welfare. |
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To supplement retirement benefits received from public and private pension systems, individuals need to make voluntary contributions and decide how to efficiently invest these contributions. In this paper, the authors analyse the problem of how to secure minimum levels of replacement income in retirement while offering attractive probabilities of reaching higher levels. Such strategies can offer an interesting alternative to target date funds, or annuities. |
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The authors assess the individual and compounding impacts of COVID-19 and climate physical risks in the economy and finance, using the EIRIN Stock-Flow Consistent model. They study the interplay between banks' lending decisions and government policy effectiveness in the economic recovery process. They calibrate EIRIN on Mexico, being a country highly exposed to COVID-19 and hurricane risks. |
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This article studies the implications of the choice of the underlying asset on the frequency and magnitude of floor breaches and on the loss of performance associated with the protection against downside risk; it considers in particular the use of a diversified portfolio of stocks as opposed to a single stock. The authors find that gap risk is more prominent when insurance is applied to a stock than to a portfolio, but it can be reduced by implementing time-invariant portfolio protection or by letting the multiplier decrease when volatility rises.
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When it comes to climate change, everything is intertwined and connected. The climate change problem raises a number of scientific and engineering challenges, but economics and finance will have a to be part of the solution. This innovative programme will help learners understand global warming with a wide perspective ranging from the science to the finance of climate change.
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An EDHEC study on greenwashing in portfolio construction entitled "Doing Good or Feeling Good? Detecting Greenwashing in Climate Investing" shows that climate scores only correspond on average to 12% of the difference in the weights of stocks in the portfolio for all the strategies that have a primary objective of impacting companies' climate performance.
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A great success for the online roundtable organised by EDHEC Business School, CASCADES, the Vienna University of Economics and Business Team and Chatham House, with over 1,800 people registered, to learn from top experts on the implications of cascading climate risks for macroeconomic and financial stability. |
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This innovative programme will help learners understand global warming with a wide perspective ranging from the science to the finance of climate change. With an expertise drawn from backgrounds ranging from nuclear engineering to finance, EDHEC faculty members collaborate to provide a 360° holistic view of climate change, leading to a better understanding of how financial markets can be used and mobilised for this unique challenge. |
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In the autumn of 2021, EDHEC experts have been invited to participate in over 10 events, a clear recognition of the school's globally acknowledged expertise in sustainable investing and climate finance by the investment management industry. |
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In October 2021, the research work conducted by Gianfranco Gianfrate and Joseph Aldi won the "best pedagogical innovation" prize in the 16th edition of the FIR-PRI Awards "Finance & Sustainability". The prize highlighted the quality of their research into the introduction of sustainable business practices within organisations. A way to engage students in the fight against climate change. |
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The results of the research work performed by EDHEC-Risk Institute have been published by leading specialised scientific publications. Get the most of our expertise on retirement investing, sustainable investing, climate finance and factor investing. |
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8 December 2021
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11 January 2022 |
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Press Review |
EDHEC-Risk Institute has been cited widely in the business and industry press. A selection of articles may be found below.
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