Current research and practitioner views from the Geneva Summit on Sustainable Finance

The 4th edition of the Geneva Summit on Sustainable Finance took place on the 7th of December in Geneva. Researchers from around the world convened to present the results of their latest research projects on sustainable finance and get feedback from practitioners.

Some of the key findings presented by academics included the following:

  • Corporate green bonds: they improve both financial and environmental performance of issuing companies. Based on the sample of green bonds studied, the value of stocks of issuing companies was found to have an excess increase in value of 0.67% compared to similar non-issuing companies. Moreover, greenhouse gas emissions of issuing companies decreased by nearly 30% within 2 years of the date of the first issuance of a green bond.
  • Exporting pollution: companies headquartered in countries with stricter environmental regulations on carbon emissions do lower their emissions (scope 1 and 2) in that country but significantly increase them abroad, resulting in pollution export. Despite that, the overall net result is a decrease in emissions on the global level.
  • Shareholder coordinated engagement: to be successful the lead investor of the coordinated effort must be from the same location as the targeted company and have high AUM, as well as have the support of foreign investors also with high AUM and a large holding in the company. A successful engagement leads to a higher growth in sales and of the average profitability (ROA) of the company.

Practitioners also got to share their experiences through a high level panel with speakers from Swiss Re, CDP Europe, Lombard Odier Asset Management and the UK Financial Conduct Authority. Some of their observations and concerns were that:

  • There is still a belief that sustainable investing means less return;
  • There lacks a standard terminology;
  • There needs to be systematic reporting on ESG issues;
  • Incentives should be put in place to encourage sustainable investing;
  • Regulators need to act faster as this field is constantly evolving.

Finally, Nick Hughes, co-founder of M-KOPA, presented the ground-breaking clean energy and finance services they provide in East Africa, showing how micro-payments may bring affordable and clean assets to millions of people.

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