Studies on ESG Financial Performance

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What is the proposed Coasian bargain called by Adrian, Bolton, and Kleinnijenhuis?

The great carbon arbitrage

What are the estimated costs of coal according to the IMF WP by Adrian, Bolton, and Kleinnijenhuis?

$78 trillion (1.2% of GDP, $125 per tonne of coal)

What is the ERISA rule under the DOL governing in terms of private sector company pension plans?

Horizon, risk tolerance, and expected return

Why is it important to consider if ESG funds can be selected as the QDIA (Qualified Default Investment Alternative)?

Many participants select the QDIA by default Signup and view all the answers

What are some forces necessary for change to occur at interpersonal, societal, and institutional levels?

Habit formation, psychology of change, global disinvestment, societal pressure Signup and view all the answers

Give an example of an external factor that led to significant change in a societal structure.

Global disinvestment and pressure against Apartheid in South Africa Signup and view all the answers

What is the practice of presenting guidance suggesting an ESG perspective when the majority of data suggests a contrary perspective?

Greenwashing Signup and view all the answers

Define economic externality in the context of ESG investing.

An economic externality is a cost or benefit that is unrelated to any behavior of that party. Signup and view all the answers

What are some examples of positive externalities mentioned in the text?

Universities providing economic spinoffs, research and development, an educated workforce, or cultural events. Signup and view all the answers

What is the common solution to negative externalities mentioned in the text?

Taxation, most commonly a Pigovian tax. Signup and view all the answers

Who is the Coase Theorem named after?

Arthur Pigou Signup and view all the answers

According to the Coase Theorem, what can the affected parties do to reach an efficient outcome?

Negotiate a mutually beneficial bargain. Signup and view all the answers

What does the Coase Theorem assume regarding transaction costs?

It assumes transaction costs are zero. Signup and view all the answers

How does the Coase Theorem propose to address conflicts of property rights?

By allowing parties to negotiate an efficient outcome. Signup and view all the answers

What is the main role of government in the context of the Coase Theorem?

Assigning property rights. Signup and view all the answers

Why can the Coase Theorem be difficult to implement in certain situations?

When there are many agents, large transaction costs, and enforcement costs. Signup and view all the answers

Define greenwashing in the context of ESG investing.

Greenwashing refers to the deceptive practice of promoting environmentally friendly products or initiatives to mask a company's harmful practices. Signup and view all the answers

Explain the economic underpinnings of ESG investing.

ESG investing integrates environmental, social, and governance factors into investment decisions to generate long-term competitive financial returns and positive societal impact. Signup and view all the answers

What are externalities in the context of ESG investing?

Externalities are the positive or negative consequences of economic activities that affect parties not directly involved in the activity. Signup and view all the answers

Explain the Coase Theorem in relation to ESG investing.

The Coase Theorem states that in the presence of property rights and low transaction costs, parties can negotiate efficient solutions to externalities without government intervention. Signup and view all the answers

What is a Pigovian tax and how does it relate to ESG investing?

A Pigovian tax is a tax imposed on goods that create negative externalities, such as pollution, to internalize the social costs of the activity. In ESG investing, advocating for Pigovian taxes aligns with promoting sustainable practices and reducing harm to society and the environment. Signup and view all the answers

Discuss the implications of the Pigou Club in the context of ESG investing.

The Pigou Club advocates for the use of Pigovian taxes to address environmental issues and internalize external costs. In ESG investing, supporting the Pigou Club's principles can lead to more sustainable investment decisions and positive societal outcomes. Signup and view all the answers