De-Facto Financial Regulation in the Form of Corporate Criminal Liability for ESG is Coming 

Traditional financial regulation would take the form of legislation passed by Congress and then interpreted by agencies. We are not in that world anymore. Given Congressional paralysis, de-facto financial regulation is being pushed by the setting of agency agendas and being communicated to the business community through announcements of priorities and prosecutions.  For example, despite […]

Are All ESG Funds Created Equal? Only Some Funds Are Committed 

“The major problem that I have is that even if they’re [ESG funds] marketed correctly, they actually have no demonstrable impact.”1  Tariq Fancy, the former head of BlackRock’s sustainable investing  Flows into ESG mutual funds have increased markedly over recent years, raising the question of whether these capital flows lead to improved ESG policies in […]

ESG as a Business Model for Small & Medium-Sized Enterprises 

As the world returns to something more recognizably normal, it seems natural to ask what the economy will look like after the pandemic. Will things ever go back to how they were, or are we facing a new – and altogether different – reality?   Whenever a crisis – political, economic, or social – impacts […]

The Sustainability Arbitrage Problem and Regulation of Private Companies 

The climate crisis presents a challenge of unprecedented scale for policymakers around the globe. Unsurprisingly, corporate governance has drawn considerable attention in this context from scholars and regulators alike. This has resulted in an abundance of policy proposals—some already implemented and others still being debated—to ensure that corporations play their part as the world transitions […]

Regulating Sustainability Risk and Sustainable Investments in Europe

The emergence of EU sustainable finance policy is a product of a new world reality characterized by increasingly degrading environmental and social conditions on one hand,[1] and deeper awareness of the substantial damage to people and property that flows from these phenomena on the other.[2] Sustainable finance policy provides critical solutions to these serious problems by improving the […]

Sustainability or Greenwashing: Evidence from the Asset Market for Industrial Pollution

In response to increasing pressures from activists, regulators, and governments, firms are accelerating the divestment of polluting assets. While this trend reflects mounting concerns about climate change, a natural question is how effective these divestments are in reducing pollution. On the one hand, Environmental, Social, and Governance (ESG) supporters can point to successful pressures that […]

ESG Commitment and the Value of “Walking the Talk”: Evidence from Closed-End Funds

Does a firm’s initiative for Environmental, Social, and Governance (ESG) increase firm value? In our recent working paper, we investigate how a firm’s commitment to ESG can increase (or decrease) the firm value using closed-end funds (CEFs) as an empirical laboratory. In particular, we focus on the role of credible commitments to ESG in determining the […]

The role of capital markets in saving the planet and changing capitalism – just kidding 

Given the emphasis on Environmental, Social, and Governance (ESG) in the media and among the finance community, one could easily believe that capital markets are a major contributor to the goal of limiting global warming. We argue this perception is largely false; a narrative strongly pushed by the finance industry to highlight green initiatives and, […]

Giving the ‘green light’ to executive pay? Shareholder monitoring and pay-for-carbon-performance

Climate change poses significant risks to the private sector, which researchers estimate to be in the order of $2.5-24 trillion, or up to 17% of global assets under management. However, given the most significant climate change risks may not materialize within the tenure of current corporate and financial actors, direct incentives to avert the tragedy of the horizon may […]

Financing Climate Justice: Taxation-and-Bonds Strategy

During the most recent United Nations Conference of the Parties (COP-26) on Climate Change, fair financialization of climate justice endeavors gained unprecedented momentum. This post proposes a novel taxation-and-bonds strategy that targets redistributing the gains of a warming earth around the world to offset the losses of global warming. Contemporary attempts to finance climate change mitigation […]