European center for sustainable finance

Sustainable & Impact Investing

Risk, return and sustainability?

Sustainable investing is high more than ever before on the agenda of asset owners, asset managers, and the financial market at large. Institutional investors publicly state they integrate environmental, social, and corporate governance (ESG) factors in their investment decisions as part of their fiduciary duty. Beyond focusing on ESG factors in mainstream return/risk optimization, these investors now also seek to demonstrate explicitly the social or environmental impact of their portfolios.

ECCE has considerable experience in using various research methods to determine

• how ESG factors influence investment risks and returns across various asset classes
• the preferences of investor clientele and pension fund beneficiaries for ESG issues
• whether 'impact investments' truly have social or environment effects in a causal way.

Shareholder engagement and sustainable corporate governance

ECCE has for decades undertaken research projects on shareholder engagement,focused on both corporate governance and sustainability.

Institutional investors have in the past decades intensified their right to vote on annual shareholder meetings and by engaging firms directly on corporate governance and sustainability-related issues. ECCE has the ambition to help understand these new developments better, thereby contributing to both the academic literature and the global investor community. Our recent research focuses on the drivers as well as the consequences of shareholder engagement and voting behavior at annual shareholder meetings.

Sustainable Banking

For a long time, the success of the banking industry was measured almost exclusively by its performance. Developments in the last decade have shown the importance of having sustainable success in international finance. Measuring success purely by the short-term profits that are generated, leads to a banking sector that is quite simply not sustainable.

The importance of sustainable banking is starting to be recognized everywhere. Attempts aimed at finding financial solutions for valuing the world’s rainforests, designing optimal contracts for micro-finance lending, implementing macro and monetary policies that facilitate risk-sharing and enhance stability, or improving risk management techniques to enhance the absorptive capacity of financial institutions all have one thing in common: the creation of a more sustainable banking system.

At ECCE, we view sustainability in finance as something that concerns both the individual firm and the industry at large. Moreover, we believe sustainability requires a safe, sound and stable banking system, as well as a banking system that contributes to economic growth and development in a sustainable manner. Current sustainable banking projects cover micro-finance, speculation and commodity prices and the finance-growth nexus.

Sustainable Real Estate

Climate change is the biggest threat facing mankind today. The abatement potential of emissions is by far largest in residential and commercial buildings, with the built environment responsible for one third of global carbon emissions. The topic of energy efficiency and sustainability in the built environment is currently a central theme in the decision-making of investors as well as policymakers. Systematic research is scant. The work of ECCE on energy efficiency and sustainability in buildings is part of a global research initiative that addresses some of the main barriers to market adoption of energy efficiency measures. The results and conclusions from this research have led to new economic insights on whether the private market does incorporate information on energy efficiency in the determination of rents and asset prices, featured in top scientific journals, practitioner magazined and in the popular media. ECCE was also the founder of GRESB, the global standard for ESG benchmarking in the real estate and infrastructure investment space.

The research agenda on building sustainability is now moving on to “Sustainability 2.0,” focusing on the people using and inhabiting buildings. Researchers from ECCE, in close cooperation with colleagues from Maastricht University's School for Public Health, have begun to look at the relationship between indoor climate and the health and performance of building users. Current projects include the implications of housing for health, indoor quality and worker productivity, and the performance of students as it relates to the quality of the classroom.

Sustainable Business