Why Don’t ESG Ratings Agree?
ESG (environmental, social, and governance) investing has become a popular choice for many investors. But how reliable are the ratings of the agencies that evaluate stocks for their ESG performance? What kind of discrepancies or “ESG noise” is found among such ratings, and can this be reduced? On October 5, 2023, Roberto Rigobon, assistant professor at the Sloan School of Management at Massachusetts Institute of Technology (MIT), posed these questions during a webinar was part of the series of talks sponsored by the Federal Reserve Bank of San Francisco (FRBSF), titled the Virtual Seminar on Climate Economics. His webinar was […]
The Greenium
Does the average household want to invest in climate-friendly assets? If so, what proportion of assets are earmarked for green investments? What kinds of assets (equity or fixed income) are preferred? “Green investments are popular, but only about one-third of German households have some kind of green account,” said Monika Piazzesi, Professor of Economics at Stanford University. She was speaking at a webinar titled “Household Climate Finance: Theory and Survey Data on Safe and Risky Green Assets,” held on September 7, 2023, as part of the Virtual Seminar on Climate Economics sponsored by the Federal Reserve Bank of San Francisco (FRBSF). Her […]
Green Stocks vs. Brown
Comparing the stock prices of climate-friendly (“green”) companies versus non-climate-friendly (“brown”) companies, which type will give better performance? Has this prediction been changing over the past decade—and why? And what are the recent pressures? On March 23, 2023, Michael Bauer, professor of economics at the University of Hamburg, delivered a webinar on green vs. brown stocks as part of the series of talks sponsored by the Federal Reserve Bank of San Francisco (FRBSF), titled the Virtual Seminar on Climate Economics. He reported results from a recent paper co-authored with three other economists appearing in the Journal of Climate Finance. Bauer […]
Steering the Ship
“Board involvement is pivotal… It’s so much easier to get climate risk capability embedded,” said Jo Paisley, President of the Global Association of Risk Professionals (GARP). “Our survey found the vast majority of boards have oversight of climate-related risks and opportunities.” She was referring to the report titled Third Annual Global Survey of Climate Risk Management at Financial Firms available from the GARP website since September 2021. Paisley and two other panel members were part of the July 12, 2022, webinar to mark the publication of a joint report from GARP and the United Nations Environment Programme Finance Initiative (UNEP FI). […]
Towards a Common Standard
Investors around the world are demanding consistent, high-quality reporting of environmental, social, and governance (ESG) data. Is there any global governing body for financial reporting that is up to the task? How can an organization ensure that sustainability reporting is comparable, consistent, and comprehensive? Furthermore, is the input from financial professionals welcomed? The answer, apparently, is “yes” on all three counts. On June 21, 2022, Josina Kamerling, member of the Value Reporting Foundation and the CFA Institute, welcomed an audience of hundreds to a webinar titled “Endgame: Will the ISSB become the comprehensive global baseline for sustainability disclosure?” She introduced the representative […]
Carbon, Cargo, Covid
As we slide into summer 2022, what are the big factors affecting the markets? Carbon, cargo, Covid. Governments and companies are starting to address the excessive carbon dioxide that is causing climate change. Interruptions of the supply chain, heavily dependent on cargo ships, continue to worsen operational risk. Meanwhile, the global economy is still dealing with the Covid-19 pandemic. On May 2, 2022, Derek Walter, head of the Institutional Asset Management Committee at the CFA Society Toronto, moderated two panelists during a webinar to discuss the underlying drivers of market changes. “We need to separate the short-term from the long-term […]
But What About Inflation?
Now that the worst of the Covid pandemic appears to be over for North America, inflation has kicked in and investors everywhere are on guard. Is the inflationary trend here for the long term? What, really, lies at the root of this particular instance of inflation? Moreover, what is the best hedge against inflation? On April 4, 2022, James Montier, a member of the Asset Allocation Committee of the CFA Society of Toronto, gave a one-hour webinar on “Hedging Inflationary Risk.” He is the author of three market-leading books: Behavioral Finance: Insights into Irrational Minds and Markets, Behavioral Investing: A […]
Death of Fundamental Analysis?
Have you been following the market frenzy around stocks for GameStop, AMC and Bed Bath & Beyond? Or the news on Wall Street Bets and Robinhood? How disruptive are these events for traditional valuation methods? What new factors must be considered when investing and allocating capital? Recent shifts in market dynamics have altered the perception of capital markets in meaningful ways. On April 8, 2021, the Corporate Finance Committee of the CFA Society of Toronto convened a panel of experts to discuss the reasons market valuations are so out of synch with fundamental analysis. Moderator Stephen Foerster, Professor of Finance […]
The Achilles Heel of Banking
After last decade’s financial crisis, regulators introduced several new measures to reduce systemic risk in the financial system. How are the new safeguards working? What are the implications for future balance sheet structure? The CFA Society Toronto convened a panel of three experts on November 25, 2020, to discuss the new regulatory capital and liquidity frameworks and how they are reshaping the way Canadian banks approach the market. The webinar, including a Q&A session, was moderated by Nigel D’Souza, Investment Analyst, Veritas Investment Research. “There’s no doubt the financial crisis changed balance sheets,” said Bruce Choy, Managing Director (Former Risk […]
Transforming Healthcare
Great strides have been made in medical treatments, pharmaceuticals and drug therapies, and patient recordkeeping – many of them by for-profit companies. How has the recent advent of Covid-19 shaped these developments? Last week, Pfizer was the first to announce a Covid-19 vaccine candidate. What new financial opportunities await? Three panellists convened on November 17, 2020, to discuss the transformation of healthcare, in a webinar sponsored by the Canadian Association of Alternative Strategies & Assets (CAASA). CAASA is a trade association representing alternative investment managers, service providers, and investors. The panel was moderated by Dr. Ted Witek, Health Care Advisor […]