EDHEC-Risk Climate Impact Institute

🔥 Over 40% of global #equity value is at risk if #decarbonisation efforts do not accelerate, with losses exceeding 50% when climate tipping points are factored in, reveals recent study by #EDHECRiskClimate. Prompt and robust abatement action is needed to keep losses below 10%. To reach these conclusions, the study implemented a probabilistic approach that accounted for #climate and #economic uncertainties and conducted a joint analysis of transition costs and physical risks. 💬 “These results underline the importance of uncertainty and state-dependent discounting for climate-aware equity valuation. Our approach shows that it is possible and fruitful to integrate climate risks into financial analysis and we will be working further to develop theoretically solid and practically implementable tools for climate-aware investment management,” said lead author, Professor Rebonato. The paper "How Does Climate Risk Affect Global Equity Valuations? A Novel Approach", conducted within the research chair established by EDHEC Business School and Scientific Beta is available here 👉 https://lnkd.in/dzHCf3r7 #ClimateFinance #ClimateRisks #ClimateChange

🌍 Quel rôle l'industrie financière peut-elle/doit-elle jouer pour accélérer la transition climatique❓ Dans cet éditorial, Frédéric Ducoulombier, Directeur de l'EDHEC-Risk Climate Impact Institute, met en lumière l'importance des #investissements massifs dans l'atténuation et l'adaptation au #changementclimatique. Il appelle à une transformation de la finance pour qu'elle devienne non seulement un facilitateur, mais un catalyseur de cette transition indispensable vers des économies durables et résilientes https://lnkd.in/e8a3nuTH 💬 "L'intégration des enjeux de durabilité dans les processus décisionnels du secteur est une question d'auto-préservation, mais elle pourrait contribuer puissamment à l'allocation de capitaux vers des investissements durables." 💬 "L'industrie financière est toutefois particulièrement bien placée pour adopter un rôle proactif et exercer une influence déterminante sur les autres secteurs." Cet article a été initialement publié dans la newsletter de juillet d'#EDHECRiskClimate 👉 Consultez la newsletter ici https://lnkd.in/dnD5HB4D #FinanceDurable #FinanceClimatique #TransitionClimatique #AStepForward

🌟 Exciting News! 🌟 We are proud to share that EDHEC Business School has ranked 2nd in France and 4th worldwide in the 2024 Financial Times Masters in Management (MiM) ranking, with an impressive jump of 7 places! This remarkable advancement highlights the strength of EDHEC’s programmes, the success of its graduates, and its leadership in academic innovation and sustainability. 🌱 The 2024 FT ranking also spotlights EDHEC’s top standing in #ESG and #NetZero education, reinforcing its mission to equip students with the knowledge to address global challenges. Generations 2050, EDHEC’s strategic plan, aims to reimagine business education and foster a net-positive economy, restoring biodiversity and ensuring a sustainable future. The faculty and permanent researchers of the EDHEC-Risk Climate Impact Institute actively support the integration of climate-related issues into the curricula of EDHEC Business School degree programmes by 1️⃣ Design and teaching 2️⃣ Supervising graduate and doctoral students in their related projects and research, notably as part of the MSc in Climate Change and Sustainable Finance and the EDHEC PhD in Finance 3️⃣ Leading the design and delivery of the online course (4 MOOCs) on Climate Change and Sustainable Investing. 💚 Congratulations to the EDHEC community for this exceptional achievement and for shaping future leaders committed transform the global economy. #ProudlyEDHEC #MakeAnImpact #AcademicExcellence #Sustainability #DareToTry #ClimateFinance More info on the FT ranking 👉 https://lnkd.in/eSz_AFGR More info EDHEC’s strategic plan "Generations 2050" 👉 https://lnkd.in/dPRwyYxV

[📖 #fridayreads] 40% of global equity at risk from current pace of decarbonization, study says. In an article 📰 published in Pensions & Investments, Christopher Marchant reports that global #equity could face a 40% downward correction if the current pace of decarbonization continues, according to research from the EDHEC Risk Climate Impact Institute. 💬 "If a more robust decarbonization approach were to be taken worldwide, the downward correction could instead be only 5-10%," the report notes. 💬 "As regulations inspired by the Taskforce for Climate-related Financial Disclosures (TCFD) are phased in globally, companies are increasingly assessing their exposure to climate risks," the article adds. The study "How Does Climate Risk Affect Global Equity Valuations? A Novel Approach" introduces a novel framework that integrates #assetpricing techniques with Integrated Assessment Models. It features a fully probabilistic treatment of #economic and #climate uncertainties, state-dependent discounting, and a consistent analysis of #transitioncosts and #physicaldamages. 📰 Read the full article 👉 https://lnkd.in/dh_mkb4S #ClimateChange #ClimateFinance #Decarbonization #GlobalEquity #ClimateRisk #ParisAgreement #TCFD #SustainableInvesting #PressReview

#ThursdayRelease Recent research by Gianfranco Gianfrate on ESG and corporate resilience during Covid19 crisis has just been published by Springer Nature Group in the Journal of International Business Studies (JIBS), a journal included in the FT50 list.   Key findings: ✅ The resilience of firms with strong ESG ratings varied globally, with significant results observed in North America. ✅ A substitution effect was identified between firm-level sustainability performance and country-level sustainability, particularly in relation to healthcare coverage. ✅ ESG performance influences not only equity markets but also international corporate debt markets, with stronger resilience noted in both credit default swaps and in bond markets.   This research was co-authored with Mirco Rubin, Dario Ruzzi, and Mathijs van Dijk.   👉 Read the full article, “On the resilience of ESG firms during the COVID-19 crisis: evidence across countries and asset classes“, here: https://lnkd.in/dM2vR5Vs #ESG #COVID19 #Equity #valuation #CreditDefaultSwap #CorporateBonds

📰 Discover the very first edition of EDHEC’s Climate Finance Highlights! Driven by our institutes and initiatives, including EDHEC-Risk Climate, EDHEC Infra & Private Assets Research Institute, and Scientific Portfolio, an EDHEC Venture, this newsletter brings you the latest #climatefinance cutting-edge research and practical applications. This quarter, we explore key developments in climate #riskmanagement, #sustainable #infrastructure, and innovative financial strategies to address the pressing challenges of #climatechange. 📖 To read this newsletter online 👉https://lnkd.in/dnMzVEqz     ✉️ To subscribe to this quarterly newsletter, please contact [email protected] 🔍 To discover the hub dedicated to EDHEC Business School's Climate Finance Research 👉 https://lnkd.in/dFZzTNCn #MakeAnImpact

📗 Study reveals 40% of global equity value at risk without accelerated decarbonisation efforts. New research, supported by Scientific Beta 🤝, highlights the significant impact of #climaterisk on global #equity valuations, particularly in scenarios with limited #climate action. The study introduces a novel framework that integrates #assetpricing techniques with Integrated Assessment Models. It features a fully probabilistic treatment of economic and climate uncertainties, state-dependent discounting, and a consistent analysis of transition costs and physical damages. The findings show that severe impact on equity valuation can be obtained with very plausible combinations of policies and physical outcomes, with significantly more downside than upside risk. Over 40% of global equity value is at risk unless decarbonisation efforts accelerate, and losses could exceed 50% with near climate tipping points. 🔗 Download the full paper 👉 How Does Climate Risk Affect Global Equity Valuations? A Novel Approach: https://lnkd.in/drsYGY7W

#MondayThoughts 🤔 "Finance for the Transition and Transition of Finance" In the editorial https://lnkd.in/dXPNTZaY of the July newsletter of the Institute, Frédéric Ducoulombier, Director, discusses the critical role of the financial industry in addressing #climatechange. 🚨 He emphasizes the urgent need for increased investment in climate change mitigation and adaptation, highlights the potential role of the financial industry as a facilitator and accelerator of the #climatetransition, and identifies necessary updates to bring about this transition in finance. 📧 Contact us at [email protected] to subscribe to this complimentary newsletter.

📘 Optimal Climate Policy with Negative Emissions Hot of the press. Paper by #EDHECRiskClimate's Scientific Director Professor Riccardo Rebonato, alongside Research Directors Dherminder Kainth & Dominic O'Kane, and Associate Researcher Lionel Melin, has been featured in the Special Issue on the Impacts of Climate Change on Economics, Finance, and Insurance of the prestigious International Journal of Theoretical and Applied Finance. Using a modification of the DICE model, the authors analyse the optimal use of emissions abatement and removal as policy responses to climate change. After calibrating the marginal costs of abatement and CO2 removal to the latest scientific information, they find that carbon removal must play a very important role in an optimal policy. If this policy is followed, they find that the Paris-Agreement 1.5-2 C warming by 2100 target is not just aspirational, but optimal. Key Takeaways: ✔️ Net-Negative Emissions: The research emphasizes that an optimal policy should aim for net-negative, not just net-zero emissions, highlighting the vital role of active CO2 removal. ✔️ Economic Implications: Achieving these targets will require significant economic and sectoral shifts, with the carbon removal industry needing to expand dramatically. ✔️ Policy Considerations: The study also cautions against the risk of moral hazard, where slowing abatement efforts might not be offset by sufficient carbon removal, advocating for maintaining current emission targets while scaling up carbon removal initiatives. The paper is free-to-read at this link :https://lnkd.in/grMrWu78. #ClimateChange #GlobalWarming #NegativeEmissionsTechnologies #IntegratedAssessmentModels #IJTAF

🔁 The Climate Threat to Global Equity Values: What Investors Must Know – Missed our recent webinar? The replay is now available! Watch here: https://lnkd.in/dM6Tf9pa During the webinar, which attracted over 800 professionals, EDHEC Business School Professor Rebonato presented key findings from the study "How Does Climate Risk Affect Global Equity Valuations? A Novel Approach." Supported by Scientific Beta, this research introduces innovative methodologies to assess the significant impact of #climaterisks on global #equity valuations, particularly under scenarios of limited #climate action. Professor Rebonato highlighted that the magnitude of the losses depends on the aggressiveness of emission abatement policy; the presence or absence of tipping points; on the extent of Central banks' willingness and ability to lower rates in states of economic distress. 📉 The study reveals that over 40% of global equity value is at risk unless decarbonization efforts accelerate, with potential losses exceeding 50% near climate tipping points. Contact us at [email protected] to access the slides of the presentation.