ESG Risk

SOSTENIBILITA' DEL VALORE NEL FINANIAMENTO IMMOBILIARE.
Long Term Sustainable Value (LTSV), stima delle caratteristiche Green e High-Performance degli immobili, Valutazione della sostenibilità dei finanziamenti, dei progetti infrastrutturali e di sviluppo immobiliare, alla luce degli Orientamenti EBA in materia di concessione e monitoraggio dei prestiti e dei fattori Environmental Social and Governance (ESG).
---
Sostenibilità del valore nel finanziamento immobiliare.
"The theory of value needs to be reconsidered in terms of long-term sustainability. Especially when the value is associated with a property which is a collateral for a mortgage." The essay on the Sustainability of Value in Property Financing (i.e. "Sostenibilità del valore nel finanziamento immobiliare"), provides an innovative conceptual framework for understanding the correlations between Long-term sustainable value, Sustainable lending, Sustainable finance associated with Environmental Social and Governance (ESG) factors, Market sustainability and Economic development. This book (currently in Italian only) is based on an international perspective in order to contribute to the analysis of issues of increasing importance for the stakeholders of the banking and financial industry.

The study was carried out to explore a cross-industry analysis of ESG practices among listed Germans firms with two main hypotheses proposed. The study adopted a mixed method approach with a descriptive research design. Both qualitative and quantitative analysis were conducted. Using Toulmin’s argumentative method, the study found that the main communication channel used by the companies listed on the stock exchange are through sustainability and integrated reports. Also, integration and thematic investing were the main ESG investment approaches used by the listed German firms in the different industries. However, thematic investing was the most dominant approach utilized across all industries. Also, using ANOVA, the study further unraveled that there is no significant difference in the mean of ESG ratings among listed German firms in different industries. Finally, using correlation and regression analysis, the study established that ESG ratings has no significant effect on the profitability (ROE, ROA and NPM) of listed German firms. The study recommended that the listed German firms improve upon their ESG practices in order to reap its full benefits in the long run.

A literature review showed that finance is a driver of sustainability. However, to achieve sustainability through finance, it is necessary to rebuild and adapt the financial system to the specifics of sustainable development. Modern financial systems can be described as one-dimensional, focusing on ensuring the economic security of transactions. Meanwhile, the growing role of risk related to non-financial factors means that the factors referred to as ESG (environmental, social, governance) become the main source threatening the stability of financial systems. Adaptation activities toward the design of so-called three-dimensional financial systems rely on incorporating ESG risk into the financial decisions of the financial institutions that make up the financial system. This is found, among other factors, in the risk assessment methodology. The general goal of the paper is to investigate which ESG criteria are incorporated into the decision-making process of financial institutions an...

ESG é uma sigla em inglês que significa governança socioambiental e corporativa. Começou a ser amplamente utilizado a partir dos princípios das Nações Unidas para Direitos humanos e negócios , integra o Pacto Global da ONU  entre empresas que voluntariamente se comprometem a seguir princípios éticos, e atualmente tem como base a Agenda 2030 . Se desdobra em diversas iniciativas em diversas áreas entre elas o selo de empresa que gera benefícios (Empresas B, Benefit corporations, movimento B).
Por traz dessa temática está a constatação de que a função da empresa não é simplesmente maximizar os lucros. Elas geram externalidades positivas e negativas que correspondem a um custo social que precisa ser contabilizado , há bens de uso comum que não podem ser explorados predatoriamente  e existem diversas outras falhas de mercados que precisam ser corrigidas pois caso sejam deixadas desreguladas levam ao pior resultado para sociedade e para as próprias empresas no longo prazo. Precisa então haver regulação pública ou privada e as métricas ESG são formas de governança privada pela adoção de diretrizes e padrões, elaboração de relatórios, contratação de auditorias externas e certificações.

Instytut Odpowiedzialnych Finansów i UN Global Compact Network Poland przygotowały na Europejski Kongres Finansowy raport “ZIELONE FINANSE w Polsce” . Jest to pierwsze tego typu opracowanie w Polsce. Naszym celem głównym było przedstawienie w możliwie szeroki sposób różnorodnych aspektów tego nowego elementu finansów.
Bartosz Bacia jest autorem rozdziału w tej publikacji poświęconego ocenom ESG oraz ratingom kredytowym.

Corporate Governance, Forensic Accounting + ESG as Investment Tools. Leesa Soulodre presents 3 tools for 21st Century Portfolio Management:
1. ESG - Environmental, Social and Governance Integration
2. AGR - Accounting and Governance Risk Metrics including bankruptcy and litigation scoring.
3. FAM - Forensic Alpha Model for black swan prediction and alpha

A literature review showed that finance is a driver of sustainability. However, to achieve sustainability through finance, it is necessary to rebuild and adapt the financial system to the specifics of sustainable development. Modern financial systems can be described as one-dimensional, focusing on ensuring the economic security of transactions. Meanwhile, the growing role of risk related to non-financial factors means that the factors referred to as ESG (environmental, social, governance) become the main source threatening the stability of financial systems. Adaptation activities toward the design of so-called three-dimensional financial systems rely on incorporating ESG risk into the financial decisions of the financial institutions that make up the financial system. This is found, among other factors, in the risk assessment methodology. The general goal of the paper is to investigate which ESG criteria are incorporated into the decision-making process of financial institutions and to verify the level of sustainability of financial systems in selected OECD (Organization for Economic Cooperation and Development) countries. The main research hypothesis assumes that incorporating ESG factors into the decision-making process of financial institutions makes financial systems more sustainable. A two-stage research procedure was used to achieve the research goal. In the first stage, to determine the ESG factors that affect the level of sustainability of financial systems and identify dependencies between ESG factors incorporated by financial institutions into the decision-making process, a fuzzy cognitive map (FCM) was used. The collective map elaborating on the basis of the opinions of experts participating in the study was built using the software FCMapper_bugfix_27.1.2016. In the second stage, based on multiple-criteria decision analysis (MCDA) using the PROMETHEE method (Preference Ranking Organization Method of Enrichment Evaluation), 23 OECD countries that respect the Equator Principles were ranked according to seven groups of criteria defined for financial system assessment (financial depth, development, vulnerability, soundness, fragility, stability, and sustainability), based on a literature review. The ranking confirmed the strong position of Scandinavian countries for assuring best sustainability practices in financial institutions and in the economy. The added value of this paper can be considered at two levels: theoretical and empirical. From the theoretical point of view, it should be noted that it is the first of this kind of analysis which prioritizes ESG factors in financial decisions and ranks financial systems according to fulfilling sustainability criteria. The original empirical approach based on the two-stage research procedure provided analysis of 62 factors, of which 21 represented the environmental scope, 25 the social scope, and 16 the governance scope, which is the main advantage of the empirical study presented in the paper.

This paper critically analyses the evolution of the UK’s key domestic regulatory standard for stewardship by institutional investors, the UK Stewardship Code (‘SC’, ‘the Code’), the second major iteration of which was introduced in 2020, ten years after the Code was first established.

The discussion is framed by an examination how the Code emerged from the theory and practice of corporate governance in the UK, which I argue can be characterised by competing ‘stakeholder’ and ‘shareholder’ perspectives. Through documentary analysis of the new Code, and its associated consultation process, it is argued that the code represents the institutionalisation of an expanded concept of stewardship embracing environmental, social and governance (ESG) considerations.

Moreover, the concept of stewardship represented by the Code is interpreted as a ‘third way’ to the traditional stakeholder and shareholder perspectives in corporate governance. Finally, the paper concludes by cautiously arguing that the new version of the Code is more likely to succeed than its predecessor by incentivising behaviours which have been shown internationally to have led to the
growth of stewardship by institutional investors, and through its strengthened monitoring and
transparency requirements for signatories.