GRASFI: Pooling academic resources to take sustainability up a level

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In the past, sustainable investing has at times been hampered by a lack of definitions and clear metrics. That is changing as regulators provide transparency on what sustainable finance is and guide investors in the right direction.


Multi-disciplinary academic research is further strengthening the credentials of sustainable investing. In promoting collaboration between global research universities, the Global Research Alliance for Sustainable Finance and Investment (GRASFI) plays a leading role. It brings together 18 top universities from around the world which will work under the GRASFI umbrella on sustainable finance and investment.

Sponsored by BNP Paribas Asset Management, the alliance seeks to enhance curricula at business schools on sustainability itself and on the information flows and metrics involved, but also on climate risk and topics such as carbon pricing. The aim to integrate sustainability into core financial analysis and have a broader, more robust pool of literature on the subject and by extension improve financial literacy.

At the inaugural GRASFI conference [1], these were some of the topics covered [2].

Corporate green bonds – Caroline Flammer (Boston University)

Subject: Examination of financial effectiveness and environmental impact of corporate green bond issuance

Conclusion: There is a measurable, sustained positive impact on the issuing company’s stock price, return on assets, and a significant impact on environmental scores and carbon emissions compared to otherwise similar companies that did not issue green bonds

Interesting fact/take-away: There is an immediate positive announcement effect on the issuer’s stock price of 0.9%.

Stock price rewards to climate saints and sinners: evidence from the Trump election – Stefano Ramelli, Alexander Wagner, Alexander Ziegler (Zurich University), Richard Zeckhauser (Harvard University)

Subject: Cross-sectional analysis of stock returns over two climate-change sensitive events (Donald Trump’s Nov 2016 election victory and his December appointment of Scott Prutt to head the Environmental Protection Agency)

Conclusion: ‘Dirty’ (i.e., high-emission) sectors outperformed, but this was not seen at the individual stock level; investors seem to have rewarded climate responsibility relatively, within sectors

Interesting fact/take-away: Climate responsibility seems to have been rewarded more as Trump’s popularity rose – an interesting variation on the positive overall market reaction.

Socially responsible corporate customers –  Rui Dai (Wharton), Hao Liaing (Singapore Management University), Lilian Ng (York University)

Subject: Examination of interaction between the corporate social responsibility policies of customers and suppliers

Conclusion: Customer CSR policies have significant multiplier effects on the CSR policies of their suppliers, but supplier CSR policies do not influence their customers

Interesting fact/take-away: The customer CSR impact is greater when supplier is in a different country.

Do investors value sustainability? A natural experiment examining ranking and fund flows – Samuel Hartzman, Abigail Sussman (University of Chicago)

Subject: Examination of mutual fund investor reactions to the publication of Globe Awards (Sustainability ratings) by Morningstar in March 2016

Conclusion: Significant outflows from bottom-category funds and inflows into top-category funds show that investors value sustainability. Some survey evidence to support motivations as being at least partly financial (higher expected returns were not realised in subsequent 11 months)

Interesting fact/take-away: The effect is only measurable at the tails, there are no significant differences in fund flows for 11th-89th sustainability rating percentiles.

Social sentiment and predictable returns – Yao Chen (Cardiff University), Alok Kumar (University of Miami), Chendi Zhang (Warwick University)

Subject: Examination of the relationship between the perceived CSR policies and stock returns

Conclusion: There is a strong, predictable positive relationship between CSR policies and sector and company returns

Interesting fact/take-away: CSR market leaders outperform peers, but laggards do not underperform peers.

The costs of corporate short-termism – Tima Bansal (Ivey School of Business)

Subject: The costs of corporate short-termism

Conclusion: Short-termism lowers growth, company survival rates, resilience and research & development/innovation, increases the incidence of mishaps and stock price volatility

Interesting fact/take-away: Companies communicating more with words tend to be longer-term, companies communicating more with numbers tend to be more short-termist.

Exporting pollutionItzhak Ben-David (Ohio State University), Stefanie Kleimeier (Maastricht University etc.), Michael Viehs (Oxford University, Hermes Investment Management)

Subject: Examination of “pollution export” effect – firms moving polluting activities from countries with high environmental regulation to laxer regime countries

Conclusion: Firms with strict home regulations do emit less globally, but there is some displacement of polluting activities abroad to countries with looser environmental regulatory regimes, particularly for companies with weaker governance

Interesting fact/take-away: Well-governed companies do not export pollution.

Global supply-chain networks and corporate social responsibility – Christoph Schiller (Toronto University)

Subject: Study of propagation of ESG (Environmental, Social & Governmental) policies and regulations between customers and suppliers through global supply-chain networks

Conclusion: There is a strong positive relationship between customer ESG adoption and subsequent supplier policies, but not from suppliers to customers. This is supported by positive financial effects. Effects are stronger when customers are in countries with higher ESG ratings, and when customers have strong bargaining power

Interesting fact/take-away: This effect is stronger when customers are in countries with higher ESG ratings, customers have bargaining power (i.e., size), set minimum ESG/CSR standards and offer supplier training programmes.

The sustainability footprint of institutional investors – Phillip Krueger and Rajna Gibson (University of Geneva)

Subject: Examination of the link between risk-adjusted performance and sustainability footprints, and investor motivations for adopting sustainability

Conclusion: Environmental scores for representative institutional investors grew steadily between 2002 and 2015. Investors with the most improved sustainability footprints had the most improved performance, investors with deteriorating footprints had deteriorating performance. Long-term investors tend to have larger sustainability footprints than shorter-term investors

Interesting fact/take-away: Representative social scores for institutional investors actually deteriorated between 2002 and 2015.

Exploring social origins in the construction of ESG measures – Robert Eccles, Judith Stroehle (Oxford University)

Subject: Examination of the social and organisational influences on the construction of ESG measures

Conclusion: Ratings methodologies reflect the origins and histories of the ESG rating companies

Interesting fact/take-away: ESG mainstreaming has driven the quantity of data rather than the quality or underlying methodologies.


[1] held 5-7 September 2018; the 2019 annual conference will be held from 3 to 6 September

[2] for the full agenda of the Maastricht meeting, click here >


For more on BNP Paribas Asset Management and GRASFI, click here >

For more on the BNP Paribas Asset Management approach to responsible investing, click here >

For more on sustainable and responsible investing with BNP Paribas Asset Management, click here >

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