Alex Edmans, 24 August 2021

Alex Edmans of the London Business School and CEPR, author of Grow the Pie, argues there doesn't have to be a trade-off between growing value for investors and for society. But what does this mean in practice, and how strong is the evidence?

Alex Edmans, 17 March 2021

It is often taken for granted that sustainability reduces a company’s cost of capital. This column argues that the relationship is significantly more complex and depends on a number of factors. It highlights an important distinction between the ‘cost of capital’ and ‘expected cash flow’ channels, which may lead to similar final outcomes but imply different underlying mechanisms. Additional factors, such as the level and nature of systemic risk, the amount of risk aversion, and the cyclical behaviour of public trust in business, are also crucial in determining whether sustainable companies enjoy a lower cost of capital. 

Alex Edmans, 11 February 2021

Policymakers, investors, and stakeholders are demanding that companies report sustainability metrics so that they can be held accountable for delivering social performance. Doing so increases the total amount of information in the market and reduces the cost of capital. However, real decisions depend on not the total amount of information, but the balance between ‘hard’ (quantitative) and ‘soft’ (qualitative) information. Since sustainability metrics only contain the former, they distort this balance – skewing managers’ sustainability investments to ones with short-term payoffs.

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European Center of Sustainable Development in collaboration with Canadian Institute of Technology will organize the 9th ICSD 2021 International Conference on Sustainable Development, with particular focus on Environmental, Economic and Socio-Cultural Sustainability.

The Conference theme : "Creating a unified foundation for the Sustainable Development: research, practice and education".

Papers will be published in Open Access EJSD Journal (Web of Science) and Proceedings.
For further information, please see the call for papers at https://ecsdev.org/publications

The 9th ICSD 2021 will be an excellent opportunity to share your ideas and research findings relevant to the Sustainability Science, through the European network of academics.

Robin Döttling, Sehoon Kim, 19 August 2020

Socially responsible investing has been at the centre of recent regulatory scrutiny and academic debate. This column explores how retail investors’ preferences for socially responsible investments respond to market distress, as revealed within mutual fund flows during the COVID-19 pandemic. The results suggest that funds with the highest sustainability ratings experience sharper declines in flows. This suggests that there tends to be a shift away from sustainability among retail investors’ preferences in the face of an economic shock, highlighting a source of fragility in the increasingly popular socially responsible investment  market. 

Aniruddh Mohan, Akshay Thyagarajan, Nicholas Muller, 31 July 2020

The nexus of economic development and environmental impact is at the core of current policy debates. This is often captured by an ‘environmental Kuznets curve’, an inverted-U shaped relationship between income and pollution levels. This column argues that, in contrast to conventional approaches, sustainability analysis should focus on the monetary damages of pollution, rather than the physical tonnage of emissions. It highlights a large divergence in the Kuznets curves based on these two approaches. In addition, it proposes a measure of GDP growth which adjusts for monetary pollution damages.

Lubos Pastor, Blair Vorsatz, 30 July 2020

Active fund managers are widely believed to outperform during market downturns. This column uses daily returns from US active equity mutual funds to examine fund performance and investor behaviour in the midst of the COVID-19 crisis. It finds that active equity mutual funds underperform a variety of passive benchmarks, contradicting the popular belief that active managers outperform in downturns. In addition, investors have favoured sustainable funds during the crisis, suggesting that sustainability is now viewed as a necessity rather than a luxury good.

Kevin Daly, Tadas Gedminas, Clemens Grafe, 20 May 2020

Although the COVID-19 crisis is a global phenomenon, emerging market economies are in a weaker position than developed economies to absorb its fiscal costs. This column assesses the impact of the crisis on government deficits and debt levels in emerging markets, and the fiscal adjustments that are likely to be required in the aftermath of the crisis. The findings suggest that median government debt will rise by around ten percentage points of GDP and that most emerging economies will face painful post-crisis adjustments. The results also imply a strikingly wide range of outcomes across emerging economies around the world.

Basak Bayramoglu, Brian Copeland, Marco Fugazza, Jean-François Jacques, 21 October 2019

With fisheries resources dwindling drastically, countries are scrambling to negotiate a deal to reduce subsidies and ensure sustainable management. This column suggests that reaching a deal on fisheries subsidies may be difficult. For many resources, international spillover effects create incentives to negotiate reductions in subsidies, since one country’s subsidy worsens other exporters’ terms of trade. However, the renewable nature of fisheries arguably limits these incentives, and a comprehensive approach to negotiations including quotas and subsidies is desirable to support both fishing communities and environmental sustainability.

Keiichiro Kobayashi, 05 May 2018

Future generations cannot influence current policies, while today’s policymakers and voters tend to be focused on the present. Understanding how to reconcile this disconnect is important for resolving intergenerational issues such as sustainability and swelling government debt. This column introduces the interdisciplinary field of ‘future design’ and discusses insights from a recent workshop held at the Research Institute for Humanity and Nature in Japan. It also proposes several directions for future design research.

Ryohei Nakamura, 01 October 2014

Many Japanese municipalities found recent population predictions for the next 30 years rather alarming. Unfortunately, most of them do not have an effective solution to the declining population problem. This column discusses different strategies that could ignite innovation and stimulate the growth of the population. Bringing in new business, identifying their comparative advantage, and stimulating community innovation could make municipalities attractive places to settle down.

Rafael Doménech, Víctor Pérez-Díaz, 11 December 2013

Based on the report issued by a Committee of Experts, the Spanish Parliament will pass a new law that implements an innovative sustainability factor in the public pension system. This column argues that the proposal solves the problem of financial sustainability in the long run while opening a wider debate on the welfare system and growth under conditions of increased global competition.

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