Press Room

Pension funds to get tougher on ESG mandates"The EDHEC Climate Risk Institute report found consultants routinely underestimate the financial impact of climate change even at extreme temperature rises with a “puzzling degree of accuracy”. If the investment consultancy sector has been soft on climate in exact measures down to the “hundredth of percentage point”, doom-centric forecasts at the other end of the scale are equally unreliable for financial modelling, the paper says. Instead, pension funds (and other asset allocators) would be better-served by “a clear description of the huge degree of uncertainty surrounding the impact of climate change on asset returns. (...) See more Institute denounces “misleading” climate advice to pension funds"An EDHEC-Risk Climate Impact Institute position paper, Portfolio Losses from Climate Damages, has warned that markets and investors are underestimating potential climate damages. It pointed to reporting by UK Local Government Pension Scheme authorities on their governance and management of climate risks. Drawing on investment consultants’ advice, reports have included simulations of climate impacts on investments that suggest portfolios would be marginally impacted – even in high temperatures. The paper, written by the institute’s scientific director Riccardo Rebonato, argued that pension trustees have been “poorly served” by consultants, meaning their estimates of portfolio losses due to climate change are “implausibly tame”. See more Uncertainty must ‘take centre stage’ in climate scenario advice to trustees"In a new position paper, Riccardo Rebonato, who is scientific director of EDHEC-Risk Climate Impact Institute, said EDHEC agreed that pension fund trustees have been poorly served by their consultants and that the models that have been used underestimate climate risk. However, he said that the models (DICE-like Integrated Assessment Models) should not be jettisoned as they can be modified to handle scenario analysis (for which they were not designed) and that it is incorrect to posit that there is an economist consensus on the severity of climate damages. See more Pension funds given misleading climate-risk advice"Professor Riccardo Rebonato, scientific director of the EDHEC-Risk Climate Impact Institute, has said that pension trustees had been poorly served by their consultants and the estimates of likely portfolio losses due to climate change in their authorities’ reports were ‘implausibly tame’. His research further exposed the failure to communicate the huge uncertainty in damage estimates as the most glaring flaw of the advice received by trustees and denounced the non-sensical precision with which some of these estimates were presented. See more Andere Klimaszenarien für Finanzmärkte" Sustainable Finance als Oberbegriff für die Finanzierung nachhaltiger Technologien und die ökologisch-soziale Transformation der Realwirtschaft hat sich ebenfalls einen festen Platz auf der Agenda erobert. Leider ist es auch komplexer und vielschichtiger geworden und es scheint, dass vor lauter Regulationsanforderungen die realen Aktivitäten kaum nachziehen können. So entsteht vielfach der Eindruck, dass die konkrete Wirkung der als nachhaltig bezeichneten Investments nicht wirklich den proklamierten Anforderungen entspricht." See more Misleading nature of climate risk advice to pension funds"In a newly released position paper, "Portfolio Losses from Climate Damages: A Guide for Long-Term Investors," Professor Riccardo Rebonato, Scientific Director of the EDHEC-Risk Climate Impact Institute, discusses the (de)merits of the advice addressed to pension trustees and engages with critics who assert that pensions are being put at risk by the flawed research and groupthink of climate economists. His research concludes that pension trustees have indeed been poorly served by their consultants. He also concurs with critics' views that the estimates of likely portfolio losses due to climate change in the authorities' reports are implausibly tame. See more Stratégie climat : les institutionnels vont plus loin"Les premières mesures prises par les investisseurs institutionnels pour décarboner leurs portefeuilles commencent à porter leurs fruits. Mais pour tenir leurs promesses de neutralité à horizon 2050, ils doivent désormais approfondir et systématiser leurs approches. Ils cherchent, souvent collectivement, les bons outils pour faire basculer leurs portefeuilles vers des stratégies alignées sur l’Accord de Paris." See more Avis de tempête pour la finance durable"Le 1er janvier prochain, le secteur financier suisse devra être prêt à mettre en place les directives de l’Association suisse des banquiers (ASB) et de l’association représentant la gestion d’actifs en Suisse, l’AMAS, concernant la finance durable. Ces directives ont pour objectifs de limiter l’écoblanchiment (ou greenwashing) et de prendre en compte l’appétence de leurs clients concernant la durabilité de leurs investissements." See more Decarbonising passive funds costs next to nothing – research"How far could investing in a low-carbon benchmark crimp returns? Not much. That’s according to a new paper by two Amundi quants, who find that tilting benchmarks such as the S&P 500 away from ‘dirty’ stocks in favour of less-polluting companies has a negligible impact on annual returns. The paper aims to address what one of the report’s co-authors, Hamza Bahaji, calls a key question among passive investors about sustainable investing: “What is the expected cost of decarbonisation?”." See more EDHEC Launches €40 Million Investment Fund To Support Startups With Impact"EDHEC just took an oversized step toward that goal. This month, it announced a new €40 million investment fund for socially and environmentally responsible startups. GENERATIONS Powered by EDHEC will be co-managed by Ring Capital, a private equity firm dedicated to supporting companies that have positive impact in their communities and the world, and will focus on seed and pre-seed startups." See more Normes européennes : "Les attaques d’Emmanuel Faber sont de faible qualité""L’ex-patron de Danone a fustigé dans une tribune l’approche européenne en matière de comptabilité extra-financière. Chercheur à l’Edhec, Frédéric Ducoulombier réfute ses arguments. See more CSRD - Malgré un fort vent de face, les normes ESG européennes ont été validées par les eurodéputés"Sa charge, plutôt violente, contre le projet européen a vivement fait réagir certains experts en comptabilité environnementale et en finance durable. Ces derniers pointent ainsi le rôle que peuvent jouer les parties prenantes non financières dans la mise en évidence d'un problème extra-financier et donc l'importance de ne pas passer sous silence des enjeux qui n'intéressent pas encore les marchés. « Une question ESG peut devenir si rapidement matérielle d'un point de vue financier qu'elle peut causer la faillite d'une entreprise qui la traitait comme sans danger pour elle », met en garde Frédéric Ducoulombier, directeur de l'EDHEC Risk Impact Institute. La plaidoirie d'Emmanuel Faber n'a finalement pas fait dévier les eurodéputés du cap fixé par la CSRD. See more Viewpoint: A response to ISSB’s Faber’s ‘triple illusion’ criticism of double materiality"In an op-ed published by French reference newspaper Le Monde* earlier this week, Emmanuel Faber, chair of the IFRS Foundation’s International Sustainability Standards Board (ISSB), represents that the double-materiality approach to sustainability reporting is a simplistic concept whose popularity derives from a “triple illusion”. See more EDHEC’s Ricardo Rebonato On Climate Change For Investors, Policymakers & Regulators"Riccardo Rebonato dives deep into the challenges posed by climate change, especially for investors, policymakers, and regulators. The uniqueness of the current climate crisis stems from its unprecedented nature, and the lack of historical data, which often is the backbone for most financial and risk assessment models. See more Hydrogen key to energy transition, but challenges remain"Hydrogen is a versatile tool for decarbonising the energy system, but its role will vary depending on a country’s existing infrastructure, Arnold said, countries with well-developed gas and oil infrastructure, such as the Netherlands and the UK, are in a good position to deploy hydrogen for a variety of uses. Countries with less developed infrastructure may need to focus on more specific applications, such as synthetic fuels or the chemical industry. See more More meaningful corporate sustainability reporting required"Corporate reporting on sustainability matters is grossly inadequate. Despite clarifications by global accounting and auditing bodies, discussion and quantification of financially material sustainability risks and opportunities remain largely absent from statutory financial reporting. And, owing to the lack of legally binding standards pertaining to non-financial reporting, companies selectively disclose information in sustainability reports to weave self-serving narratives that too often bear little relation to their actual impacts. See more What Is The Best Master’s For Sustainability?"Climate change stands as one of the most pressing challenges of our time, a reality that demands collective action across disciplines and sectors. Amidst this backdrop, the prestigious EDHEC Business School has launched a transformative educational program focused on Climate Change and Sustainable Investing. The initiative, already with a remarkable enrollment of over 10,000 learners, not only epitomizes the influential role of education in fostering sustainable practices but also highlights the crucial contribution of finance in combating climate change. The Climate Change and Sustainable Investing program by EDHEC stands as a testament to the power of education in fostering sustainable practices. See more More meaningful corporate sustainability reporting required in business decisions"Corporate reporting on sustainability matters is grossly inadequate. Despite clarifications by global accounting and auditing bodies, discussion and quantification of financially material sustainability risks and opportunities remain largely absent from statutory financial reporting. And, owing to the lack of legally binding standards pertaining to non-financial reporting, companies selectively disclose information in sustainability reports to weave self-serving narratives that too often bear little relationship to their actual impacts". See more Investors Balk at EU’s Greenwashing Blind Spot: ESG Regulation"Corporate finance departments and auditors have only recently begun to consider how to weigh ESG risks, said Frederic Ducoulombier, director of the EDHEC-Risk Climate Impact Institute. That makes full disclosure critical, he said. The 50,000 companies that will eventually have to report under CSRD “are not used to the exercise,” Ducoulombier said. “The accounting and auditing profession also needs to radically scale up. Sustainability assurance is still in infancy and has abetted sustainability washing". See more Analysis: Europe’s sustainability standards: glass half full or empty?"In its comments on the regulations to the European Commission in early July, the EDHEC-Risk Climate Impact Institute also criticised them for not observing the same standards as other European sustainability reporting regulations. It urged the regulators to “require all climate-related disclosures from all reporting entities”, and if materiality is an issue, at least require entities to declare why they deemed some issues material or not". See more EDHEC-Risk concerned about availability and quality of ESRS disclosures"EDHEC-Risk Climate Impact Institute has welcomed the preservation of the double materiality principle and broad coverage of ESG issues but has, however, expressed concerns about the availability and quality of disclosures, following the recent announcement regarding the European Commission’s adoption of the European Sustainability Reporting Standards (ESRS). See more Professor Riccardo Rebonato: “A significant risk re-pricing may be overdue"The scientific director of the EDHEC-Risk Climate Impact Institute and a professor of finance, tells Andrew Holt about why he is encouraged by efforts to address climate change, but says institutional investors should move from ‘canned scenarios’ and raises issues about carbon removal". See more L’Edhec mise sur le développement durable et la finance climatique"La sustainability, le développement durable et inclusif, est au cœur de la stratégie de l’Edhec. « Nous voulons devenir l’un des leaders, sinon le leader, de la finance climatique avec un centre de recherche maintenant bien implanté à Nice et Londres. Les marchés se sont un peu endormis et ne mesurent pas encore très bien les impacts financiers du changement climatique », établit encore Emmanuel Métais dont le centre de recherche sur les infrastructures intègre également ces dimensions. Un centre qui se développe avec la vente d’indices qui permettent de mieux calibrer les investissements et gérer les impacts environnementaux". See more New ISSB standards: Appeasement or a new era of accountability?"The ISSB’s approach focuses solely on single materiality, or how sustainable factors relate to the financial value of a business, as Frédéric Ducoulombier, director at the EDHEC-Risk Climate Impact Institute explains: “We remain solidly in the realm of single materiality - the progress achieved is thus in the standardisation of the metrics". See more Emmanuel Metais (Edhec) : "La génération d'aujourd'hui veut changer le monde, à nous de les préparer à cela"C'est quoi, la finance durable? La finance, c'est des milliers de milliards de dollars qui sont investis tout autour du monde. Et ce qu'on veut c'est que ces milliers de milliards de dollars soit orientés de manière à lutter contre le changement climatique. A l'Edhec, c'est un centre de recherche : 20 millions d'euros qu'on va dépenser sur les cinq prochaines années pour avoir des chercheurs sur nos campus de Nice, de Londres et de Singapour, qui vont essayer de bien comprendre d'une part, l'influence du changement climatique sur la finance et, d'autre part, comment la finance peut avoir un impact positif sur le changement". See more We need new tools to predict climate risks"Assigning probabilities to the socio-economic narratives is very difficult. But if we are interested in their climate consequences, these narratives ultimately translate into paths for economic growth, emissions and technological development." (...) We know less about these factors than we would like. But we do have some information about economic growth; on how technological barriers limit the speed with which we can cut emissions; about the fastest rates of decarbonisation observed to date; or the link between investment in abatement technology and technological progress (what economists call “learning by doing”). See more The IMF’s Turn to Lead on Climate“While the International Monetary Fund has made great strides on climate change in a short time, emerging markets and developing economies need resources to invest in resilience more urgently than ever. There are four ways the IMF can help them shift to a low-carbon pathway and finance adaptation measures before it’s too late. See more EDHEC : « nous avons repensé nos programmes pour former nos étudiants aux enjeux environnementaux »“ Qu’il s’agisse de notre master ou de nos MScs, nos étudiants en finance bénéficient de l’expertise de plus de 50 enseignants-chercheurs et des travaux de pointe que nous conduisons au sein de l’EDHEC-Risk Climate, notre centre de recherche dédié à la finance climatique, ou encore au sein d’EDHECinfra, qui émet des recommandations en matière d’infrastructures durables.(...) See more Climate regulation and financial risk: The challenge of policy uncertainty“(...) Finance must become a major lever for the environmental transition. Our programs are designed with this in mind and are based on a virtuous triptych: academic excellence, hybridization of knowledge and professional approach. Whether it's our master's degree or our MScs, our finance students benefit from the expertise of more than 50 teacher-researchers and the cutting-edge work we carry out at EDHEC-Risk Climate, our research centre dedicated to climate finance, or at EDHECinfra, which issues recommendations on sustainable infrastructure. (...) See more Climate regulation and financial risk: The challenge of policy uncertainty“Climate risk has become a major concern for financial institutions and financial markets. Yet, climate policy is still in its infancy and contributes to increased uncertainty. For example, the lack of a sufficiently high carbon price and the variety of definitions for green activities lower the value of existing and new capital, and complicate risk management. This column argues that it would be welfare-enhancing if policy changes were to follow a predictable longer-term path. Accordingly, the authors suggest a role for financial regulation in the transition." See more Finance durable : "Il est absolument indispensable de relier un scénario climatique à une probabilité d’occurrence" (EDHEC-Risk Climate)“S'ils sont devenus ces dernières années un outil incontournable pour les investisseurs, les scénarios climats restent encore (très) loin d'être optimaux. Le point avec Riccardo Rebonato, Directeur scientifique d' EDHEC-Risk Climate et spécialiste du sujet. See more Irene Monasterolo, Directrice de l’Edhec Risk Climate Impact Institute Programme“Lauréate du prix Jeunes chercheurs en finance verte de la Banque de France de 2022, Irene Monasterolo invite à revoir le cadre de l’action des institutions financières mondiales pour inclure le risque climatique dans les stratégies d’investissement." See more EDHEC Dean Emmanuel Métais Wants Grads To Lead On Climate & Impact“My first goal was really to put in place what I just mentioned: To have an impact for future generations, to launch this mindset, and to start deeply transforming the school in order to reach this goal. So basically, this meant three big transformations: First, EDHEC is quite well known for our research in asset management. I really want us now to be known worldwide for climate finance, so finance for good. We have launched a research center (EDHEC-Risk Climate Impact Institute) on which we have dedicated €20 million, to develop tools and good research for integrating climate change in finance." See more NGFS Climate Scenarios 'weakened by lack of investment data“Scenarios used by global central banks to assess climate readiness are hampered by a lack of investment and financial data, according to a paper published by Banco de Espana. (...) The research was authored by climate finance academic Irene Monasterolo, BdE senior adviser Maria Neto, and Bloomberg head of climate products, Edo Schets." See more EU's Ecolabel needs a rethink?“The European Securities and Markets Authority (ESMA) has produced useful work quantifying the proposed extension of the voluntary EU Ecolabel to retail financial products. Only 16 out of some 3,000 sustainability-orientated UCITS equity funds – i.e. funds reporting under the Sustainable Financial Disclosures Regulation (SFDR) Article 8 and 9 – are estimated to meet three main quantitative criteria set forth in the latest report from the European Commission." See more Viewpoint: And if we trusted the market to improve ESG information?“It is high time that the market fulfilled its role in the area of ESG information and it is urgent for the #regulator to stop making false promises on the “greening” of portfolios and to allow investors to do their work of environmental impact evaluation" See more Climate finance: what is reasonable to expect from MDBs?“Irene Monasterolo of EDHEC Business School, and Stefano Battiston of the University of Zurich and Ca’ Foscari University of Venice, share a few thoughts on climate financing and risk, and the roles that multilateral development banks (MDBs), governments and the private sector should play in this space." See more Irene Monasterolo : « Il devient urgent que la finance internationale fasse sa révolution »“L’économiste Irene Monasterolo appelle, dans une tribune au « Monde », à changer radicalement le cadre théorique de l’action des institutions financières mondiales pour inclure le risque climatique dans les stratégies d’investissement (...) Pourquoi le financement pour l’atténuation et l’adaptation reste-t-il insuffisant, notamment dans les pays émergents et en voie de développement ? Cela s’explique par l’incertitude autour des politiques climatiques et par l’incohérence des signaux adressés aux marchés. Aucune intervention financière, qu’elle soit publique ou privée, ne peut répondre au changement climatique en l’absence de politiques économiques et énergétiques crédibles. See more Climate finance: what is reasonable to expect from MDBs?“MDBs are a crucial actor but in order to fully deliver on their role for theclimate, they need to revise the way they think and act on climate finance. They need a 'theoryof change'. This means in particular to recognise that climate risks are forward-looking and thatin transition scenarios the risk of carbon-intensive projects is higher than for low-carbon ones.This should be reflected into the climate financial risk assessment of projects. Many MDBs havenot yet internalised this idea." See more Irene Monasterolo : COP27: Development banks must do more on climate“Banks don't just have resources for loans or grants at their disposal," said Irene Monasterolo, an economist specializing in climate finance at Edhec." See more EDHEC announces creation of major research centre in climate finance“Following the “Research for Business” approach that sets EDHEC apart from its competitors, this new research centre will leverage finance research to contribute to the positive transformation of the global economy and society. Over the next five years, an impressive 20 million euros will be invested in ERCII. Under the leadership of Frédéric Ducoulombier and with a staff of 25 experts and researchers, the centre will assist investors in the transition to a low-carbon economy by helping them understand and manage the financial implications of climate change." See more Shades of green: Do they matter?“Professor Gianfranco Gianfrate of the EDHEC Business School looks at how proceeds are used from light to dark green bonds" See more The IMF Needs to Mitigate Climate Transition Risk“The potential of countries' climate policies to damage other countries' economies has not received as much attention as it deserves. Without proper international coordination, well-intended measures in major economies could further widen the income and welfare gap between rich and poor countries." See more TOP 10 PYTHON MACHINE LEARNING COURSES TO TAKE UP IN 2022“Python and Machine Learning for Asset Management- Coursera - Offered by EDHEC Business School This course will enable you to master machine-learning approaches in the area of investment management. It has been designed by two thought leaders in their field, Lionel Martellini from EDHEC-Risk Institute and John Mulvey from Princeton University. Starting from the basics, they will help you build practical skills to understand data science so you can make the best portfolio decisions." See more Corporate Values Do Have a Market Price“The impact on market values is echoed in the second study, by the EDHEC Business School’s Risk Institute, albeit related to greenwashing rather than actual ESG violations. EDHEC analyzed the performance of the 500 largest U.S. companies between 2012 and 2017, comparing Newsweek Sustainability Rankings with ESG scores produced by London Stock Exchange Group Plc’s Refinitiv unit.(1) The researchers proposed that the former scores are “more reliable and accurate” than the latter, arguing that any widening of the gap in favor of the ESG valuation compared with the NWS count was evidence of greenwashing." See more Orpea’s high scores show inadequacies of ESG framework, research firm says“Orpea as recently as September highlighted upgrades from three firms: ISS ESG, Vigeo Eiris and Sustainalytics. Analysts at Scientific Beta, a research venture of the Singapore Exchange and the EDHEC Risk Institute, said the “unreliable nature of these inputs not only limits their usefulness but can at worst have negative impacts on the achievement of real-world ESG goals sought by investors.”" See more Best Sustainable Finance/ ESG Courses (2022)“Climate Change and Sustainable Investing Specialization from EDHEC - Why take this course? EDHEC is a premier European business school offering industry leading programs and courses. They have several online course offerings that we have reviewed on BankersByDay and this one on sustainable investment is equally impressive and worth adding to your CV. The core aim of this course is to demystify the relationship between climate change and economy/ Finance. The financial world has a key role to play in solving this crisis, along with scientific, engineering and economic efforts. The courses in module each focus on one of these areas and cover them all one-by-one. First up is the science and engineering of climate change so lay the groundwork of the problem. See more Is Basel Faulty? Bank Regulation Is Still Built on Shaky Foundations“In the wake of the 2008-2009 financial crisis, financial institutions in general, and banks in particular, have faced a heightened regulatory scrutiny, a more muscular and intrusive style of supervision, and substantially more onerous capital and liquidity requirements." See more ‘Retirement Bonds’ could increase income, lower risk: EDHEC“In the wake of the 2008-2009 financial crisis, financial institutions in general, and banks in particular, have faced a heightened regulatory scrutiny, a more muscular and intrusive style of supervision, and substantially more onerous capital and liquidity requirements." See more Why climate mitigation scenarios should factor in transition risk“Within sustainable finance, institutional investors face increasing demands to assess their exposure to climate risk. Climate mitigation models that factor in investor expectations are a key component of that. Climate change is recognised today by financial supervisors as a source of financial risk for institutional investors." See more