Bocconi Students for Sustainable Finance

The European  Sustainable Investment Conference.

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WHAT WE DO

In this division, members are responsible for periodically drafting reports on relevant sustainable finance issues after having made accurate and deep researches on the topic.

DOWNLOAD AND READ OUR LATEST REPORTS

Abstract

This paper explores the concept of green bond issuance as a way to fund climate solutions using debt capital markets. Green bonds are fixed-income securities where the proceeds are used to finance projects with environmental benefits. The report examines the history of the green bond market, highlighting its potential to drive capital towards sustainable investments. It also discusses the challenges faced by issuers and investors, as well as two case studies (New York Metropolitan Transportation Authority, and Daimler AG). The paper argues that green bonds can and will play a significant role in funding the transition to a low-carbon economy and mitigating the impacts of climate change, provided that further research and collaboration will be employed.

Abstract

In this report, changes in the fintech industry are explored with respect to different conducts taken by neobanks regarding sustainability-driven measures. It is examined in detail how such banks, as in the cases of Revolut, Monzo, N26, and Nubank, took over an environment before dominated by traditional banking, often linked to transactions with the fossil fuel industry and high maintenance fees, by pushing for rapid growth and through convenient customer experience. Meanwhile, though, green neobanks also arose in the recent few years, such as the later discussed Californian company Aspiration, pushing for product differentiation by making its core services adapted to the rising concern coming from young adults regarding sustainability and associating their brand image to a strong commitment to the subject (even if in reality, some misleading data and controversy were found). Hence, we try to understand the relationship between the before-mentioned neobanks and the green trend, interpreting their grasp of it through different instances.

Finally, we introduced some future perspectives and data on the neobank industry and the high potential it holds at the moment, of course, favored by the recent ascending trend toward digitalization around the globe. Their future is not certain, as traditional banks try to get back their positions in the market, but partnerships could be made in order to support all sides.

Abstract

Emmanuel Faber became the CEO of Danone in 2014. From the start, he was one of the most prominent advocates of ESG policies in the corporate world. During his tenure, Danone became an example of ESG excellence, and one of the few for firms of its size. Faber also succeed in making Danone the first listed purpose-driven enterprise in France. Nevertheless, he was dismissed in March 2021, after a campaign of some activist investors that lamented poor stock returns. In this article, we first provide an overview of the firm’s history, then analyze what changes Faber implemented as CEO.

We also speak about the recent past of both Danone and Faber, after they parted ways. We conclude with a comment on the broader implications of the case for ESG-friendly firms. 

Abstract

Stock valuations have never been so high. Green stocks (that is, the stock of com- panies that operate in the green technology sector), however, are high even com- pared to the market. Therefore, it is only natural for investors to start wondering whether we are in a green bubble.

Since we were wondering ourselves, we tried to tackle the question from more than one angle and try to find an answer in doing so. First, we took a qualitative approach and tried to define a bubble, learning from the many examples that the market has provided over the years.

Then, we tried to figure out whether there may be an alternative reason, other than typical investor euphoria, that explains why prices have been growing so fast during the past years.

Last, we turned to the numbers. We analyzed financial data and tried to fit them into Ray Dalio’s bubble predictor. Unsurprisingly, there is not a straightforward answer to our initial question. While some indicators are off, others aren’t, and the situation in the stock market, while worth of caution, is not (yet) screaming “bub- ble”. We concluded our report with a focus on Orsted, a very successful green company that while having good prospects in terms of price, is lagging behind other, much riskier but similar companies that have never turned a profit. We be- lieve that the Orsted case might be the paradigm of why investors should be cau- tious with their money and think a lot about the horse they want to bet on.

Abstract

Over the years, the European Union has implemented a number of policies and measures to fight the climate crisis and meet its climate and energy targets. The Emission Trading System (ETS) is a cornerstone of the EU’s strategy to oppose climate change. It is a market-based policy instrument and the major instrument setting a clear carbon price. The system works on a cap-and-trade basis, where a cap is set on the total amount of greenhouse gases that can be emitted. It was first introduced in 2005. The implementation of the system has been divided into distinct trading periods, known as “phases”. Currently, Phase 4 has just been entered (starting from 2021).


First, the paper analyses the observable results of the EU ETS. Effective emissions reductions are supported by evidence in Phases 1 and 3. Innovations range from short-term measures such as fuel changes, to long-term oriented innovation funds. Competitive impacts show themselves in the pass-through of additional emission costs to final customers.


Secondly, the malfunctioning of the system is discussed. Some issues have been the direct consequences of the measures undertaken to prevent carbon leakage, while others, such as price volatility, governance, and monitoring issues have been caused by external factors.
Afterwards, a brief analysis of suggested ways to address the fundamental flaws

of the EU ETS is provided. In particular, the introduction of a dynamic output- based permit allocation process, the need for international harmonization of individual markets, back-loading allowances and the setting of trading limits are reviewed.


Lastly, the analysis focuses on how carbon prices are not the only, nor the best way, to assess the EU ETS market effectiveness. The generalized synthetic method manages to capture a more well-rounded and real result, concluding in an 8.1% reduction in emission attributable to the ETS. The new proposed revisions for ‘Phase 4’ – reinforcement, preventing carbon leakage, increasing funding and
involving all stakeholders – is also explained.

Abstract

As a source of financing projects with a positive and tangible impact on the environ- ment, green bonds became always more popular growing exponentially their market volume ever since they were introduced in 2009 by the World Bank. Finally, this in- strument seems to be always more appreciated by institutional and sovereign issuers as well, as one of the key financial tools to support the green transition. The market trends are clear as in 2012 the green bond issuance amounted to $2.6 billion and just in 2019 it was above $250 billion. Global issues, such as climate change and social inequalities, highlighted by the pandemic, will only raise further the need for green and more broadly ESG linked bonds. The three most popular sustainable debt products are Green, Social and Sustainabil- ity bonds, with green bonds being by far the most popular of the three. Looking at these signs from the market we went deeper into understanding these financial in- struments in all its shapes and shadows.
Always more supranational institutions are trying to define a taxonomy for sustaina- ble investment and some guidelines for the issuance of green bonds, including the International Capital Market Association issuing the Green Bonds Principles and the Climate Bonds Initiative which is developing policy proposals for green, social and sustainable bonds. The EU is also working on it, the European Green Deal of 11 De- cember 2019 underlined the need for long-term signals to direct financial and capital flows to green investments. The Commission will present a renewed sustainable fi- nance strategy in the third quarter of 2020, focusing on several actions, including making it easier for investors to identify sustainable investments and ensuring that they are credible, establishing an EU Green Bond Standard (GBS). As much as the market is growing and institutional issuers are coming along, they still represent a small fraction of the sector so we asked ourselves: will we see an increasing integra- tion of ESG sustainability targets also in sovereign debt issues?
To find our answer we looked at the two most recent issuances of green bonds by Egypt and Italy. Both countries found themselves facing a demand more than five times larger than they had expected and this helps us understanding how hot the market for this instrument is. In fact, the successful issuances will surely represent an incentive for other riskier southern-Europe and African governments to go ahead
with green bonds to finance the transition to a low carbon economy.

Abstract

Sustainable fashion is a movement and process of fostering change in the fashion system towards a greater ecological integrity and social justice. It concerns more than just addressing textiles or products, comprising addressing the whole sys- tem of fashion.
Recently, more and more attention has been posed on threats that the fashion industry has caused not only to the environment but also to the cultural and social sphere.
This report aims at giving an overall understanding of the topic and is structured as follows: after a brief introduction and some background knowledge, the main problems related to the environmental and social perspectives are to be dis- cussed, together with relevant examples.
Moving forward, the report provides concrete and meaningful initiatives put into place by both customers and companies to invert the negative trend.
Further, following the ESG bond issuance fever, the report assesses the rising im- portance of sustainable finance in the fashion industry and discusses how sustain- able financing must be integrated into corporate turning green strategy with two representative SLBs issuance cases.
Finally, a conclusion wraps up the main takeaways and briefly elaborate on future prospects using the pandemic situation as a starting point for the industry to em-
brace sustainability opportunities.

Abstract

The fish market has been growing for the past thirty years and it seems that it will
not stop in the nearest future. Among the drivers of an increasing demand one
can find the appreciation of fish and its integration into distant populations’ diet
and an increasingly larger middle class who want to include fish in its eating
habits. The booming demand is supported by an expanding supply sustained by
technology innovation and implementation of new methodologies.
Aquaculture, the activity of fish farming, is becoming globally pivotal to fish
production to sustain supply without overfishing the oceans or harming the
marine ecosystem. The industry of aquaculture is a successful one and it grew at
an annual CAGR of 3.2% in the last twenty years. Furthermore, fish produced from
aquaculture is about to surpass in terms of volume that of traditionally fished.
Among the factors to analyze to forecast the future of the industry one has to
consider the opportunities and constraints of the industry. Among the first, one
can find changes in consumption habits due to macroeconomic reasons, among
the second, one can trace reasons linked to access to capital and rising industry
costs.
Aquaculture activity is variegated in its essence. First differentiation regards the
salinity of the water used: fresh, marine, or brackish water. Second, we can differ
two main types of production methods, namely inland and mariculture.
Aquaculture must also be analyzed from the ESG impact point of view. Studies
have reported the activity to be critically dangerous for the environment as well
as for human beings. Nevertheless, solutions to these issues have been drafted
and they aim of making the activity sustainable which, as a matter of fact, is an
adjective that cannot be associated to it yet.
Finally, an analysis of covid impact may help the readers understanding how the
pandemic has stroke on this industry as well. Responses of the FAO, though, seem
to have both halted the negative impact and fastened the technological
development.

Abstract (This report is available in italian language only)

Il presente report ha l’obiettivo di studiare il mercato dell’home delivery, sottolineandone potenzialità, margini di crescita, criticità e trend di sviluppo, nell’ottica di valutare l’applica- bilità ad esso del software proprietario sviluppato dalla startup Ermes-X. Quest’ultima si pone l’obiettivo di creare soluzioni aziendali per l’ottimizzazione di mezzi e personale, por- tando, tra gli altri vantaggi, a ridurre l’impatto ambientale del sistema logistico.

La sua attività si concentra su:

  • Pianificazione trasporti in ambito logistico;

  • Organizzazione del personale;

  • Gestione distribuzione e consegne a domicilio.

    Il software, in pochi secondi, rispettando gli obiettivi e i vincoli prefissati, calcolerà la solu- zione ottimale. Una volta eseguito il calcolo del percorso, verranno mostrati all’utente:

  • KPIS e dati sui giri generati;

  • Visualizzazione grafica di tutti i percorsi che verranno effettuati;

  • Informazioni su errori per eccessivo tempo di guida, volume, peso e attività.

Al fine di valutarne dunque i margini di implementazione in un settore come quello del food home delivery, è stata condotta una preliminare analisi del settore, seguita da un approfondimento sui principali attori che verrebbero coinvolti da questo processo di otti- mizzazione: i riders. La ricerca è poi stata completata da un focus su due start-up operanti in tale settore, Winelivery e Thirsty Delivery, per comprenderne l’approccio innovativo. Il report prosegue poi concentrandosi sul principale player in Italia, Just Eat, presentandone la peculiarità in termini di inquadramento del proprio personale. L’ultimo paragrafo vuole invece delineare i vantaggi nell’adozione del software Ermes-X da parte di aziende attive nel food delivery, chiarendo quali aspetti dell’organizzazione logistica ne verrebbero positivamente impattati.

Abstract

The rising pressure coming from governments’ and supranational entities’

policies, increasing regulation, and investors’ requests is nowadays forcing oil and gas companies to take all the necessary means to mitigate their environmental impact and increase transparency. Global investors are increasingly conscious of environmental issues. Oil and gas companies are more and more pressured to disclose consistent, comparable, and reliable data, while activist shareholders are challenging US and Europe-based oil major 􏰁􏰂􏰃􏰄􏰅 on their climate policies and emissions-reduction plans. In the five markets examined by the Global Sustainable Investment Alliance (Australia and New Zealand, Canada, Europe, Japan, and the United States) sustainable investments reached assets of $30.7 trillion in early 2018, one-third of total investment. To satisfy the ESG standards, every company must develop sustainable environmental and governance practices, but they take on great and increasing importance in the oil and gas sector. Environmental risks can be divided into four major categories: Energy efficiency, Air emissions, Water management, Waste management. In order to address stakeholders’ expectations about sustainable development, companies belonging to the oil and gas industry should develop structural strategies to guide their future actions.

The recommended approach should be holistic and should try to achieve the highest financial impact at the minimum cost and effort. From an asset management point of view, listed renewable power portfolios have outperformed listed fossil fuel portfolios in all geographies considered (Germany, France, UK, USA). During periods of high market and oil price volatility, Fossil Fuel portfolios experienced larger drawdowns than Renewable Power portfolios. Renewable Power Portfolios performance has significantly improved over the last five years and their volatility has decreased.

The energy sector is accountable for a great deal of human-made GHG emissions, representing a high risk for society. Although the economic slowdown caused by the Covid-19 outbreak has contributed in decreasing energy emissions, only structural changes in the O&G industry operations can bring about significant and permanent cuts.

From now onwards, with the aid of the most recent technologies, O&G companies shall adopt holistic strategies to increase their level of transparency and accountability, decrease their environmental footprint, and minimize costs to improve their financial margins.

Abstract

In a context characterized by a strong and active awareness towards the sustainability, it is a must to take in consideration and explain the Dow Jones Sustainability Indexes (DJSI), one of the most renowned and long-lived ethic indexes. This family of indexes evaluating the sustainability performance of publicly traded companies, are the longest-running global sustainability benchmarks worldwide and have become the gold standard for sustainability investing.

The remarkable history of the DJSI, which were launched in September 1999 as a landmark collaboration between Dow Jones Indexes (now S&P Dow Jones Indexes) and SAM (now RobecoSAM), make us understand why it is the world’s first ever global sustainability benchmark.

The DJSI provided one of the first opportunities to invest in a subset of global companies that are leading sustainability practices within their respective industries. This very stable and growing index allowed both investors and firms to pivot their investment portfolio toward a more sustainable and ethic vision. It is important to affirm that ESG-focused investors are interested in demonstrating the positive impact that their investing had on both society and the planet, by contributing to the achievement of international policy commitments.

We analyzed the performance of the index over time, noticing how the DJSI enabled investors to access the first global subset of leading sustainable companies, gathering firms characterized by best-in-class ESG practices within their respective industries and how the investment in this type of index has increased significantly the firm’s share price, attracting the interest of long-term investors.

Abstract

The need of a common framework for ESG reporting standards is becoming more and more important every day. The fact that every company measures different factors using different accounting frameworks gave rise to frustration amongst investment groups over the plethora of competing systems for measuring sustainability. As a consequence, different organizations have proposed their solution to overcome the problem.

The objective of this report is to explain which are the existing, most used ESG reporting standards and to find a solution to this alphabet soup.
The first part briefly describes the most accredited methods to compare ESG reporting, while the second provides an overview of the benefits of adopting a global, voluntary framework. Moreover, we analyze ESG data providers from the investors’ point of view, trying to understand if investors can get a clear and unbiased ESG information disclosure. In conclusion, the report provides two solutions that we believe are the most adequate and viable ones to solve the chaos created by all the different reporting standards used.

Abstract

Nowadays, awareness about sustainable and socially responsible investing (SRI) is experiencing a sharp rise. COVID-19 has provided a further boost to the market momentum around ESG funds. In fact, many policymakers and investors are viewing the crisis as a wake-up call. We need a change in the approach to investing. Of course, many observers have highlighted the similarities between the unforeseen risks of a pandemic and issues such as climate change. “Over the long run, COVID-19 could prove to be a major turning point for ESG investing, or strategies that consider a company’s environmental, social and governance performance alongside traditional financial metrics,” said Jean-Xavier Hecker and Hugo Dubourg, Co-Heads of ESG & Sustainability within J.P. Morgan EMEA Equity Research. Furthermore, the raising awareness of social and racial issues in the US and worldwide has produced an additional shift in perspective. While ESG investing was generally associated with the Environmental issues, the recent protests following George Floyd’s murder have pushed investors to flock towards companies that show major commitment in Social and Governance aspects as well. A PwC research shows that, in a best-case scenario, the sector might experience a jump in the share of the European fund sector from 15% to 57%. There are many factors suggesting the potential growth path of this sector. It is worth considering that 87% of millennials and 64% of women agree that ESG plays an important role in their investment decisions. In this “ESG-euphoric” environment, ESG rating agencies are rapidly emerging as an important and recognized player in determining investment strategies of many institutional market participants, and not only. In particular, these agencies offer a deeper and more specific assessment on the “sustainability profile” of companies in order to discriminate between them. As Savita Subramanian (Head of Global ESG research Bank of America) put it, in a world of companies that just “talk the talk”, it is important to individuate those who actually “walk the walk”. What is yet to be proved is: are these agencies really helpful and accurate in their analysis? The Equifax case provides clear evidence in that sense, showing how reports may have an anticipating power in predicting future risks and potentially harmful circumstances.

Abstract

In the past, Environmental, Social, and Governance (ESG) issues have represented a secondary concern for investors, who traditionally focused their attention on traditional value drivers, such as profits and growth. However, the demand for ESG investments has recently boomed due to the benefits that such funds can add to a portfolio: low volatility and consistent returns. Moreover, green stocks are increasingly becoming a fundamental component of portfolios’ diversification. Nevertheless, it is not always clear whether ESG could be considered a value driver on its own and if ESG daily news can affect stocks’ price. The present report provides a general overview about scholars’ studies showing how ESG news impacts on stocks’ price, also deepening the analysis with a focus on empirical evidences of such behaviors. In relation to this, results differ if the news is grouped and analyzed in subcategories: negative news tends to move prices more than positive ones do, the type of media disclosing the news affects the result of the outcome and the pieces of information contained in the news are the ultimate factor impacting the firms market capitalization. Therefore, ESG can be considered as a secondary driver for stock prices since the reaction of markets to these types of news varies much depending on each firm’s peculiarities.

Abstract

The concept of corporate value has changed in the last decades: nowadays, it does not only refer to the financial sphere, but it also includes social and environmental considerations. As a consequence, it has emerged the necessity of reducing the existing information asymmetry between organizations and investors on companies’ non-financial performance. Reporting instruments have been used to satisfy this need.

In particular, the objective of this paper is to explain the typical structure of a sustainability report. The first part briefly describes the Global Reporting Initiative’s Standards for sustainability reporting, while the second provides an example of a sustainability report as to better understand the practical application of the reporting requirements.

Abstract

Over the last years investors have become more interested in sustainable investing, by integrating Environmental, Social and Governance (ESG) factors into their valuation analysis. The main goal of this new practice consists in improving the return and the risk profile of a portfolio while generating a positive impact for the society and the environment.

WHAT WE DO

In this division, members are responsible for periodically drafting reports on relevant sustainable finance issues after having made accurate and deep researches on the topic.

DOWNLOAD AND READ OUR LATEST REPORTS

Abstract

In this report, changes in the fintech industry are explored with respect to different conducts taken by neobanks regarding sustainability-driven measures. It is examined in detail how such banks, as in the cases of Revolut, Monzo, N26, and Nubank, took over an environment before dominated by traditional banking, often linked to transactions with the fossil fuel industry and high maintenance fees, by pushing for rapid growth and through convenient customer experience. Meanwhile, though, green neobanks also arose in the recent few years, such as the later discussed Californian company Aspiration, pushing for product differentiation by making its core services adapted to the rising concern coming from young adults regarding sustainability and associating their brand image to a strong commitment to the subject (even if in reality, some misleading data and controversy were found). Hence, we try to understand the relationship between the before-mentioned neobanks and the green trend, interpreting their grasp of it through different instances.

Finally, we introduced some future perspectives and data on the neobank industry and the high potential it holds at the moment, of course, favored by the recent ascending trend toward digitalization around the globe. Their future is not certain, as traditional banks try to get back their positions in the market, but partnerships could be made in order to support all sides.

Abstract

Emmanuel Faber became the CEO of Danone in 2014. From the start, he was one of the most prominent advocates of ESG policies in the corporate world. During his tenure, Danone became an example of ESG excellence, and one of the few for firms of its size. Faber also succeed in making Danone the first listed purpose-driven enterprise in France. Nevertheless, he was dismissed in March 2021, after a campaign of some activist investors that lamented poor stock returns. In this article, we first provide an overview of the firm’s history, then analyze what changes Faber implemented as CEO.

We also speak about the recent past of both Danone and Faber, after they parted ways. We conclude with a comment on the broader implications of the case for ESG-friendly firms. 

 

Abstract

Stock valuations have never been so high. Green stocks (that is, the stock of com- panies that operate in the green technology sector), however, are high even com- pared to the market. Therefore, it is only natural for investors to start wondering whether we are in a green bubble.

Since we were wondering ourselves, we tried to tackle the question from more than one angle and try to find an answer in doing so. First, we took a qualitative approach and tried to define a bubble, learning from the many examples that the market has provided over the years.

Then, we tried to figure out whether there may be an alternative reason, other than typical investor euphoria, that explains why prices have been growing so fast during the past years.

Last, we turned to the numbers. We analyzed financial data and tried to fit them into Ray Dalio’s bubble predictor. Unsurprisingly, there is not a straightforward answer to our initial question. While some indicators are off, others aren’t, and the situation in the stock market, while worth of caution, is not (yet) screaming “bub- ble”. We concluded our report with a focus on Orsted, a very successful green company that while having good prospects in terms of price, is lagging behind other, much riskier but similar companies that have never turned a profit. We be- lieve that the Orsted case might be the paradigm of why investors should be cau- tious with their money and think a lot about the horse they want to bet on.

 
 
 

Abstract

Over the years, the European Union has implemented a number of policies and measures to fight the climate crisis and meet its climate and energy targets. The Emission Trading System (ETS) is a cornerstone of the EU’s strategy to oppose climate change. It is a market-based policy instrument and the major instrument setting a clear carbon price. The system works on a cap-and-trade basis, where a cap is set on the total amount of greenhouse gases that can be emitted. It was first introduced in 2005. The implementation of the system has been divided into distinct trading periods, known as “phases”. Currently, Phase 4 has just been entered (starting from 2021).

 

 

First, the paper analyses the observable results of the EU ETS. Effective emissions reductions are supported by evidence in Phases 1 and 3. Innovations range from short-term measures such as fuel changes, to long-term oriented innovation funds. Competitive impacts show themselves in the pass-through of additional emission costs to final customers.

 

 

Secondly, the malfunctioning of the system is discussed. Some issues have been the direct consequences of the measures undertaken to prevent carbon leakage, while others, such as price volatility, governance, and monitoring issues have been caused by external factors.

Afterwards, a brief analysis of suggested ways to address the fundamental flaws

 

of the EU ETS is provided. In particular, the introduction of a dynamic output- based permit allocation process, the need for international harmonization of individual markets, back-loading allowances and the setting of trading limits are reviewed.

 

 

Lastly, the analysis focuses on how carbon prices are not the only, nor the best way, to assess the EU ETS market effectiveness. The generalized synthetic method manages to capture a more well-rounded and real result, concluding in an 8.1% reduction in emission attributable to the ETS. The new proposed revisions for ‘Phase 4’ – reinforcement, preventing carbon leakage, increasing funding and involving all stakeholders – is also explained.

 
 
 

Abstract

As a source of financing projects with a positive and tangible impact on the environ- ment, green bonds became always more popular growing exponentially their market volume ever since they were introduced in 2009 by the World Bank. Finally, this in- strument seems to be always more appreciated by institutional and sovereign issuers as well, as one of the key financial tools to support the green transition. The market trends are clear as in 2012 the green bond issuance amounted to $2.6 billion and just in 2019 it was above $250 billion.  Global issues, such as climate change and social inequalities, highlighted by the pandemic, will only raise further the need for green and                more                broadly                ESG                linked                bonds. The three most popular sustainable debt products are Green, Social and Sustainabil- ity bonds, with green bonds being by far the most popular of the three. Looking at these signs from the market we went deeper into understanding these financial in- struments in all its shapes and shadows.

Always more supranational institutions are trying to define a taxonomy for sustaina- ble investment and some guidelines for the issuance of green bonds, including the International Capital Market Association issuing the Green Bonds Principles and the Climate Bonds Initiative which is developing policy proposals for green, social and sustainable bonds. The EU is also working on it, the European Green Deal of 11 De- cember 2019 underlined the need for long-term signals to direct financial and capital flows to green investments. The Commission will present a renewed sustainable fi- nance strategy in the third quarter of 2020, focusing on several actions, including making it easier for investors to identify sustainable investments and ensuring that they are credible, establishing an EU Green Bond Standard (GBS).  As much as the market is growing and institutional issuers are coming along, they still represent a small fraction of the sector so we asked ourselves: will we see an increasing integra- tion of ESG sustainability targets also in sovereign debt issues?

To find our answer we looked at the two most recent issuances of green bonds by Egypt and Italy. Both countries found themselves facing a demand more than five times larger than they had expected and this helps us understanding how hot the market for this instrument is. In fact, the successful issuances will surely represent an incentive for other riskier southern-Europe and African governments to go ahead with green bonds to finance the transition to a low carbon economy.

 
 

Abstract

Sustainable fashion is a movement and process of fostering change in the fashion system towards a greater ecological integrity and social justice. It concerns more than just addressing textiles or products, comprising addressing the whole sys- tem of fashion.

Recently, more and more attention has been posed on threats that the fashion industry has caused not only to the environment but also to the cultural and social sphere.

This report aims at giving an overall understanding of the topic and is structured as follows: after a brief introduction and some background knowledge, the main problems related to the environmental and social perspectives are to be dis- cussed, together with relevant examples.

Moving forward, the report provides concrete and meaningful initiatives put into place by both customers and companies to invert the negative trend.

Further, following the ESG bond issuance fever, the report assesses the rising im- portance of sustainable finance in the fashion industry and discusses how sustain- able financing must be integrated into corporate turning green strategy with two representative SLBs issuance cases.

Finally, a conclusion wraps up the main takeaways and briefly elaborate on future prospects using the pandemic situation as a starting point for the industry to em-brace sustainability opportunities.

 

Abstract

The fish market has been growing for the past thirty years and it seems that it will

not stop in the nearest future. Among the drivers of an increasing demand one

can find the appreciation of fish and its integration into distant populations’ diet

and an increasingly larger middle class who want to include fish in its eating

habits. The booming demand is supported by an expanding supply sustained by

technology innovation and implementation of new methodologies.

Aquaculture, the activity of fish farming, is becoming globally pivotal to fish

production to sustain supply without overfishing the oceans or harming the

marine ecosystem. The industry of aquaculture is a successful one and it grew at

an annual CAGR of 3.2% in the last twenty years. Furthermore, fish produced from

aquaculture is about to surpass in terms of volume that of traditionally fished.

Among the factors to analyze to forecast the future of the industry one has to

consider the opportunities and constraints of the industry. Among the first, one

can find changes in consumption habits due to macroeconomic reasons, among

the second, one can trace reasons linked to access to capital and rising industry

costs.

Aquaculture activity is variegated in its essence. First differentiation regards the

salinity of the water used: fresh, marine, or brackish water. Second, we can differ

two main types of production methods, namely inland and mariculture.

Aquaculture must also be analyzed from the ESG impact point of view. Studies

have reported the activity to be critically dangerous for the environment as well

as for human beings. Nevertheless, solutions to these issues have been drafted

and they aim of making the activity sustainable which, as a matter of fact, is an

adjective that cannot be associated to it yet.

Finally, an analysis of covid impact may help the readers understanding how the

pandemic has stroke on this industry as well. Responses of the FAO, though, seem

to have both halted the negative impact and fastened the technological

development.

Abstract

Private equity managers are starting to include ESG considerations into their in-vestment decisions. There are three main reasons why they do so: to comply with increasing regulators and public institutions pressure, to assess and deal with ESG risks and, ultimately, to create value. Therefore, the aim of this paper is to analyze the first two factors as well as deep diving into the third one, through the analysis of two case studies: The Carlyle Group and CVC Capital Partners.
In terms of regulation, the investment dimension has been mainly affected by both mandatory (EU Disclosure Regulation 2088/2019) and voluntary (The Global Reporting Initiative and The Principles for Responsible Investment) standards.
Another primary driver is represented by ESG risk management as its non-consideration would cause investment risk underestimation. Currently, there is still no binding framework to include ESG risks in the overall risk management procedure.
Furthermore, a third factor should be carefully considered: value creation. Even though it is still not considered as relevant as the aforementioned ones, the path set out up to now seems to suggest that it will gain increasing recognition.
Exemplifying ESG value creation, the first case study regards The Carlyle Group, which focuses its sustainability practice on three priorities: value creation, robust governance & transparency and internal ESG practices. The management of RAC LTD best represents Carlyle’s ESG approach.
Secondly, the case of CVC Capital Partners is assessed. The company believes that the main levers towards the achievement of sustainable operations at portfolio companies are: workplace, community, marketplace, environment, and governance. A good example of this is represented by Continental Foods, acquired in 2013 by CVC Fund V.
To conclude, the analysis carried out proved that the current hype on ESG adoption is not only caused by reactive reasons, but also due to the value to be created by a successful incorporation of ESG criteria and a positive management of externalities.

Abstract (This report is available in italian language only)

Il presente report ha l’obiettivo di studiare il mercato dell’home delivery, sottolineandone potenzialità, margini di crescita, criticità e trend di sviluppo, nell’ottica di valutare l’applicabilità ad esso del software proprietario sviluppato dalla startup Ermes-X. Quest’ultima si pone l’obiettivo di creare soluzioni aziendali per l’ottimizzazione di mezzi e personale, portando, tra gli altri vantaggi, a ridurre l’impatto ambientale del sistema logistico.

La sua attività si concentra su:

  • Pianificazione trasporti in ambito logistico;

  • Organizzazione del personale;

  • Gestione distribuzione e consegne a domicilio.

    Il software, in pochi secondi, rispettando gli obiettivi e i vincoli prefissati, calcolerà la soluzione ottimale. Una volta eseguito il calcolo del percorso, verranno mostrati all’utente:

  • KPIS e dati sui giri generati;

  • Visualizzazione grafica di tutti i percorsi che verranno effettuati;

  • Informazioni su errori per eccessivo tempo di guida, volume, peso e attività.

Al fine di valutarne dunque i margini di implementazione in un settore come quello del food home delivery, è stata condotta una preliminare analisi del settore, seguita da un approfondimento sui principali attori che verrebbero coinvolti da questo processo di ottimizzazione: i riders. La ricerca è poi stata completata da un focus su due start-up operanti in tale settore, Winelivery e Thirsty Delivery, per comprenderne l’approccio innovativo. Il report prosegue poi concentrandosi sul principale player in Italia, Just Eat, presentandone la peculiarità in termini di inquadramento del proprio personale. L’ultimo paragrafo vuole invece delineare i vantaggi nell’adozione del software Ermes-X da parte di aziende attive nel food delivery, chiarendo quali aspetti dell’organizzazione logistica ne verrebbero positivamente impattati.

Abstract

The rising pressure coming from governments’ and supranational entities’

policies, increasing regulation, and investors’ requests is nowadays forcing oil and gas companies to take all the necessary means to mitigate their environmental impact and increase transparency. Global investors are increasingly conscious of environmental issues. Oil and gas companies are more and more pressured to disclose consistent, comparable, and reliable data, while activist shareholders are challenging US and Europe-based oil major 􏰁􏰂􏰃􏰄􏰅 on their climate policies and emissions-reduction plans. In the five markets examined by the Global Sustainable Investment Alliance (Australia and New Zealand, Canada, Europe, Japan, and the United States) sustainable investments reached assets of $30.7 trillion in early 2018, one-third of total investment. To satisfy the ESG standards, every company must develop sustainable environmental and governance practices, but they take on great and increasing importance in the oil and gas sector. Environmental risks can be divided into four major categories: Energy efficiency, Air emissions, Water management, Waste management. In order to address stakeholders’ expectations about sustainable development, companies belonging to the oil and gas industry should develop structural strategies to guide their future actions.

The recommended approach should be holistic and should try to achieve the highest financial impact at the minimum cost and effort. From an asset management point of view, listed renewable power portfolios have outperformed listed fossil fuel portfolios in all geographies considered (Germany, France, UK, USA). During periods of high market and oil price volatility, Fossil Fuel portfolios experienced larger drawdowns than Renewable Power portfolios. Renewable Power Portfolios performance has significantly improved over the last five years and their volatility has decreased.

The energy sector is accountable for a great deal of human-made GHG emissions, representing a high risk for society. Although the economic slowdown caused by the Covid-19 outbreak has contributed in decreasing energy emissions, only structural changes in the O&G industry operations can bring about significant and permanent cuts.

From now onwards, with the aid of the most recent technologies, O&G companies shall adopt holistic strategies to increase their level of transparency and accountability, decrease their environmental footprint, and minimize costs to improve their financial margins.

Abstract

In a context characterized by a strong and active awareness towards the sustainability, it is a must to take in consideration and explain the Dow Jones Sustainability Indexes (DJSI), one of the most renowned and long-lived ethic indexes. This family of indexes evaluating the sustainability performance of publicly traded companies, are the longest-running global sustainability benchmarks worldwide and have become the gold standard for sustainability investing.

The remarkable history of the DJSI, which were launched in September 1999 as a landmark collaboration between Dow Jones Indexes (now S&P Dow Jones Indexes) and SAM (now RobecoSAM), make us understand why it is the world’s first ever global sustainability benchmark.

The DJSI provided one of the first opportunities to invest in a subset of global companies that are leading sustainability practices within their respective industries. This very stable and growing index allowed both investors and firms to pivot their investment portfolio toward a more sustainable and ethic vision. It is important to affirm that ESG-focused investors are interested in demonstrating the positive impact that their investing had on both society and the planet, by contributing to the achievement of international policy commitments.

We analyzed the performance of the index over time, noticing how the DJSI enabled investors to access the first global subset of leading sustainable companies, gathering firms characterized by best-in-class ESG practices within their respective industries and how the investment in this type of index has increased significantly the firm’s share price, attracting the interest of long-term investors.

Abstract

The need of a common framework for ESG reporting standards is becoming more and more important every day. The fact that every company measures different factors using different accounting frameworks gave rise to frustration amongst investment groups over the plethora of competing systems for measuring sustainability. As a consequence, different organizations have proposed their solution to overcome the problem.

The objective of this report is to explain which are the existing, most used ESG reporting standards and to find a solution to this alphabet soup.
The first part briefly describes the most accredited methods to compare ESG reporting, while the second provides an overview of the benefits of adopting a global, voluntary framework. Moreover, we analyze ESG data providers from the investors’ point of view, trying to understand if investors can get a clear and unbiased ESG information disclosure. In conclusion, the report provides two solutions that we believe are the most adequate and viable ones to solve the chaos created by all the different reporting standards used.

Abstract

Nowadays, awareness about sustainable and socially responsible investing (SRI) is experiencing a sharp rise. COVID-19 has provided a further boost to the market momentum around ESG funds. In fact, many policymakers and investors are viewing the crisis as a wake-up call. We need a change in the approach to investing. Of course, many observers have highlighted the similarities between the unforeseen risks of a pandemic and issues such as climate change. “Over the long run, COVID-19 could prove to be a major turning point for ESG investing, or strategies that consider a company’s environmental, social and governance performance alongside traditional financial metrics,” said Jean-Xavier Hecker and Hugo Dubourg, Co-Heads of ESG & Sustainability within J.P. Morgan EMEA Equity Research. Furthermore, the raising awareness of social and racial issues in the US and worldwide has produced an additional shift in perspective. While ESG investing was generally associated with the Environmental issues, the recent protests following George Floyd’s murder have pushed investors to flock towards companies that show major commitment in Social and Governance aspects as well. A PwC research shows that, in a best-case scenario, the sector might experience a jump in the share of the European fund sector from 15% to 57%. There are many factors suggesting the potential growth path of this sector. It is worth considering that 87% of millennials and 64% of women agree that ESG plays an important role in their investment decisions. In this “ESG-euphoric” environment, ESG rating agencies are rapidly emerging as an important and recognized player in determining investment strategies of many institutional market participants, and not only. In particular, these agencies offer a deeper and more specific assessment on the “sustainability profile” of companies in order to discriminate between them. As Savita Subramanian (Head of Global ESG research Bank of America) put it, in a world of companies that just “talk the talk”, it is important to individuate those who actually “walk the walk”. What is yet to be proved is: are these agencies really helpful and accurate in their analysis? The Equifax case provides clear evidence in that sense, showing how reports may have an anticipating power in predicting future risks and potentially harmful circumstances.

Abstract

In the past, Environmental, Social, and Governance (ESG) issues have represented a secondary concern for investors, who traditionally focused their attention on traditional value drivers, such as profits and growth. However, the demand for ESG investments has recently boomed due to the benefits that such funds can add to a portfolio: low volatility and consistent returns. Moreover, green stocks are increasingly becoming a fundamental component of portfolios’ diversification. Nevertheless, it is not always clear whether ESG could be considered a value driver on its own and if ESG daily news can affect stocks’ price. The present report provides a general overview about scholars’ studies showing how ESG news impacts on stocks’ price, also deepening the analysis with a focus on empirical evidences of such behaviors. In relation to this, results differ if the news is grouped and analyzed in subcategories: negative news tends to move prices more than positive ones do, the type of media disclosing the news affects the result of the outcome and the pieces of information contained in the news are the ultimate factor impacting the firms market capitalization. Therefore, ESG can be considered as a secondary driver for stock prices since the reaction of markets to these types of news varies much depending on each firm’s peculiarities.

Abstract

The concept of corporate value has changed in the last decades: nowadays, it does not only refer to the financial sphere, but it also includes social and environmental considerations. As a consequence, it has emerged the necessity of reducing the existing information asymmetry between organizations and investors on companies’ non-financial performance. Reporting instruments have been used to satisfy this need.

In particular, the objective of this paper is to explain the typical structure of a sustainability report. The first part briefly describes the Global Reporting Initiative’s Standards for sustainability reporting, while the second provides an example of a sustainability report as to better understand the practical application of the reporting requirements.

Over the last years investors have become more interested in sustainable investing, by integrating Environmental, Social and Governance (ESG) factors into their valuation analysis. The main goal of this new practice consists in improving the return and the risk profile of a portfolio while generating a positive impact for the society and the environment.