8 Ways to Look at Deforestation Risk
“Forests are the lungs of our land, purifying the air,” wrote Franklin D. Roosevelt. Looking at the economic side, what does the loss of forests mean to global markets? “Deforestation is a risk to the supply chain,” said Gabriel Thoumi, Director Capital Markets at Climate Advisers. “It puts billions of dollars at risk.” He was the first of four presenters at the May 4, 2017, webinar sponsored by the Global Association of Risk Professionals. He began with a summary of the activities of Chain Reaction Research, a group which has been actively assessing the sustainability of the supply chains of […]
Environmental Risk: 5 Lessons Learned
“Deforestation causes severe environmental damage,” said Hilde Jervan, chief advisor of the Council of Ethics of the Government Pension Fund Global (GPFG) of Norway. The scale of deforestation of tropical forests is large, and it is occurring within areas that are ecologically important, thereby aggravating the loss of biodiversity. The GPFG has strong ethical guidelines passed by the Norwegian Parliament in 2004. Jervan discussed these in light of the actual example of tropical deforestation. She was the second of four presenters at the May 4, 2017, webinar on Supply Chain Risk due to Deforestation sponsored by the Global Association of […]
Weatherproofing Bonds
When it comes to managing climate risk, what is the wise investor to do? Low-carbon investing is one possibility. We recently interviewed Marielle de Jong, head of fixed -income quant research at Amundi Asset Management. She said, “The purpose of low-carbon investing is not to penalize companies that produce a lot of CO2. The question is whether the production line is carbon efficient, whether there is no unnecessary spoilage. That is why the selection criterion is the intensity, the tonnage of CO2 per added value, and not the tonnage itself.” She cautioned, “It is a complex task to measure CO2 […]
Weatherproofing Equities
Risks in finance are many and varied. How can a forward-looking researcher choose which areas need the most attention? We recently interviewed Patrick Bolton, professor of business at Columbia University and asked what led to his interest in hedging climate risk. “I am interested in long-term investing, especially how large long-term institutional investors should think about the risk-return trade-offs they face,” he said. “Long-term investors have to think harder about risks that do not yet appear material to short-term investors. One category of such risks is what is now commonly referred to as environmental, social and governance factors, or in […]
Spotting Signs of Poor Corporate Governance. Part 2: ESG Management
Corporate governance is only one part of an overall phenomenon known as “ESG management,” or how a company handles environmental, social, and corporate governance (ESG) issues. “Research shows that companies that disclose more ESG information are more likely to enjoy a lower cost of capital,” said Max Zehrt, Senior Manager at Sustainalytics. He was addressing a noon-hour seminar of financial analysts and portfolio managers on the subject of corporate governance on May 8, 2013 at the offices of the CFA Society Toronto. His talk was the second part of a two-speaker panel moderated by Toby Heaps of Corporate Knights. Zehrt was […]
Spotting Signs of Poor Corporate Governance. Part 1: “Ask the Tough Questions”
“Good governance practices are important for the sound financial growth of a corporation—the board directs and protects,” said Stephen Kibsey, VP Equity Risk Management at Caisse de dépôt et placement du Québec. On May 8, 2013 he addressed a noon-hour seminar of financial analysts and portfolio managers through remote link on the subject of corporate governance at the offices of the CFA Society Toronto. His talk was the first part of a two-speaker panel moderated by Toby Heaps, co-founder and president of Corporate Knights. Kibsey pointed out that concern over matters like environment, social and governance (ESG) issues within a […]