This document discusses a study analyzing the risk mitigation effect of ESG performance on corporate default risk over time and across sectors. It begins with an introduction discussing relevant regulatory frameworks. The literature review finds that ESG metrics can reduce default risk, though impacts may differ for individual ESG factors. Two hypotheses are presented: 1) ESG performance has a greater impact on default risk over longer time horizons. 2) The impact of ESG varies across sectors. The methodology section describes the dataset of European firms and regression models used to test the hypotheses. Preliminary results are then shown for one regression on 1-year probability of default.
This presentation shows the key findings from the 2020 OECD Business and Finance Outlook which focuses on sustainable and resilient finance, in particular the environmental, social and governance (ESG) factors that are rapidly becoming a part of mainstream finance. It evaluates current ESG practices, and identifies priorities and actions to better align investments with sustainable, long-term value – especially the need for more consistent, comparable and available data on ESG performance. The COVID-19 pandemic has further highlighted the urgent need to consider resilience in finance, both in the financial system itself and in the role played by capital and investors in making economic and social systems more dynamic and able to withstand external shocks. Find out more at https://oe.cd/bizfin
1- Introduce your environmental issue and your purpose of analysis.docxmonicafrancis71118
1- Introduce your environmental issue and your purpose of analysis of the impacts the issue has created and what is being done to help this issue (solutions).
2- Develop a background paragraph of the issue - the history of its development, its current situation, and its size and scope.
3- Develop a paragraph for each impact this environmental issue has on the world, explaining the impact and providing evidence of this impact from sources. (3 parghs)
4- Develop an analysis paragraph for each solution that is being used or developed – explaining the solution clearly, and discussing how this will impact the problem, discussing the impact and limitations of the solution.
5- Develop a clear conclusion summarizing your analysis process and insights gleaned from your analysis.
Reporting on long-term value creation by Canadian companies: A
longitudinal assessment
Petra F.A. Dilling a, *, Peter Harris b
a School of Management, New York Institute of Technology, 701 W Georgia St., Vancouver, BC V7Y 1K8, Canada
b School of Management, New York Institute of Technology, 26West 61st Street, New York, NY, NY 10023, USA
a r t i c l e i n f o
Article history:
Received 30 August 2017
Received in revised form
21 January 2018
Accepted 27 March 2018
Available online 27 April 2018
Keywords:
Long-term value creation
Integrated reporting
Corporate social responsibility (CSR)
Canadian extractive sector
Sustainability
Stakeholders
a b s t r a c t
In the wake of the global financial crisis, a new wave of stakeholder demands has developed calling on
companies to shift focus towards long-term value creation and moving away from a short-term earnings
emphasis. Aligned with these demands, urgent calls for more transparency and improved reporting on
both financial as well as non-financial reports have been made. The objective of this study was to analyze
longitudinal disclosure quality and quantity trends in reporting on long-term value creation of 19
publicly traded Canadian energy and mining companies. Content analysis was conducted in order to
assess disclosure on long-term value creation in annual financial and sustainability reports. The empirical
results show that the companies experienced a substantial increase in the reporting disclosure quality
and quantity. This was true for both disclosure in the annual financial reports as well as in the sus-
tainability reports. These results supported the hypotheses that Canadian public energy and mining
companies had increased their quantity and quality of long-term value creation disclosure in 2014 as
compared to 2012. Even though increases in disclosure quality could be observed (especially in the areas
of governance, responsible work practices, outside relationships and risk management), overall disclo-
sure quality (especially in areas such as connectivity between financials and sustainability sections,
materiality analysis, projects with high climate risk exposure, cost of energy, responsible work practices,
ince.
The document discusses green auditing, including planning, areas of concern, reporting, and implementation. It provides an overview of the necessity of green audits and differences between internal/external audits. Key aspects of audit planning discussed are engagement circumstances, risks, intended users, and standards like AA1000. Areas of concern addressed include regulations, waste management, and supply chain risks. Reporting guidelines from India, GRI, and benefits of reporting are covered. Implementation is shown to involve deciding to report, identifying impacts and audiences, and assuring and publishing the final report.
The document discusses green audit planning and reporting. It covers the necessity of green audits, audit planning considerations like engagement risks and intended users, areas of concern to audit like safety and waste management, and reporting guidelines. Reporting provides benefits like better performance measurement, stakeholder trust, and strategic advantages. In India, reporting is voluntary though the Companies Act requires some environmental reporting. Most large Indian companies follow Global Reporting Initiative guidelines in their sustainability reports.
Novel R&D Capabilities as a Response to ESG Risks-Lessons From Amazon’s Fusio...IJMIT JOURNAL
Environmental, Social, and Governance (ESG) management is essential for transforming corporate
financial performance-oriented business strategies into Finance (F) + ESG optimization strategies to
achieve the Sustainable Development Goals (SDGs).
In this trend, the rise of ESG risks has divided firms into two categories. Former incorporates a growthmindset that creates a passion for learning, and urges it to improve itself by endeavoring Research and
development (R&D) -driven challenges, while the other category, characterized by risk aversion, avoids
challenging highly uncertain R&D activities and seeks more manageable endeavors.
This duality underscores the complexity of corporate R&D strategies in addressing ESG risks and
necessitates the development of novel R&D capabilities for corporate R&D transformation strategies
towards F + ESG optimization.
NOVEL R & D CAPABILITIES AS A RESPONSE TO ESG RISKS- LESSONS FROM AMAZON’S FU...IJMIT JOURNAL
Environmental, Social, and Governance (ESG) management is essential for transforming corporate
financial performance-oriented business strategies into Finance (F) + ESG optimization strategies to
achieve the Sustainable Development Goals (SDGs).
In this trend, the rise of ESG risks has divided firms into two categories. Former incorporates a growthmindset that creates a passion for learning, and urges it to improve itself by endeavoring Research and
development (R&D) -driven challenges, while the other category, characterized by risk aversion, avoids
challenging highly uncertain R&D activities and seeks more manageable endeavors.
This duality underscores the complexity of corporate R&D strategies in addressing ESG risks and
necessitates the development of novel R&D capabilities for corporate R&D transformation strategies
towards F + ESG optimization.
Building on this premise, this paper conducts an empirical analysis, utilizing reliable firms data on ESG
risk and brand value, with a focus on 100 global R&D leader firms. It analyzes R&D and actions for ESG
risk mitigation, and assesses the development of new functions that fulfill F + ESG optimization through
R&D. The analysis also highlights the significance of network externality effects, with a specific focus on
Amazon, a leading R&D company, providing insights into the direction for transforming R&D strategies
towards F + ESG optimization.
The dynamics of stakeholder engagement in F + ESG optimization are indicated with the example of
amazon's activities. Through the analysis, it became evident that Amazon's capacity encompassing growth
and scalability, specifically its ability to grow and expand, is accelerating high-level research and
development by gaining the trust of stakeholders in the "synergy through R&D-driven ESG risk
mitigation."
Finally, as examples of these initiatives, the paper discussed the Climate Pledge led by Amazon and the
transformation of Japan's management system.
The Determinants of Integrated Reporting Quality: an Empirical Analysis Francesco Bavagnoli
1) The study examines the determinants of integrated reporting quality using a sample of 165 integrated reports from 55 companies between 2013-2015.
2) The results show that assurance and region are important determinants, with integrated reporting quality being higher for companies located in countries where integrated reporting is mandatory and in Europe.
3) Firm size, leverage, profitability, and industry type did not show significant associations with integrated reporting quality as hypothesized, requiring further analysis with a larger sample.
1) The document examines the relationship between corporate social responsibility (CSR) and financial performance of Chinese listed companies, analyzing how CSR may have a deferred effect on improving financial metrics like return on assets (ROA) and return on equity (ROE).
2) It uses ordinary least squares regression to model the impact of current and previous years' CSR performance scores on current financial performance, controlling for factors like company size, earnings per share, industry, and age.
3) Preliminary results suggest CSR may not generate immediate financial gains but could improve financial performance over longer periods as CSR benefits materialize for stakeholders and boost a company's reputation, market share, and ultimately profits.
This presentation shows the key findings from the 2020 OECD Business and Finance Outlook which focuses on sustainable and resilient finance, in particular the environmental, social and governance (ESG) factors that are rapidly becoming a part of mainstream finance. It evaluates current ESG practices, and identifies priorities and actions to better align investments with sustainable, long-term value – especially the need for more consistent, comparable and available data on ESG performance. The COVID-19 pandemic has further highlighted the urgent need to consider resilience in finance, both in the financial system itself and in the role played by capital and investors in making economic and social systems more dynamic and able to withstand external shocks. Find out more at https://oe.cd/bizfin
1- Introduce your environmental issue and your purpose of analysis.docxmonicafrancis71118
1- Introduce your environmental issue and your purpose of analysis of the impacts the issue has created and what is being done to help this issue (solutions).
2- Develop a background paragraph of the issue - the history of its development, its current situation, and its size and scope.
3- Develop a paragraph for each impact this environmental issue has on the world, explaining the impact and providing evidence of this impact from sources. (3 parghs)
4- Develop an analysis paragraph for each solution that is being used or developed – explaining the solution clearly, and discussing how this will impact the problem, discussing the impact and limitations of the solution.
5- Develop a clear conclusion summarizing your analysis process and insights gleaned from your analysis.
Reporting on long-term value creation by Canadian companies: A
longitudinal assessment
Petra F.A. Dilling a, *, Peter Harris b
a School of Management, New York Institute of Technology, 701 W Georgia St., Vancouver, BC V7Y 1K8, Canada
b School of Management, New York Institute of Technology, 26West 61st Street, New York, NY, NY 10023, USA
a r t i c l e i n f o
Article history:
Received 30 August 2017
Received in revised form
21 January 2018
Accepted 27 March 2018
Available online 27 April 2018
Keywords:
Long-term value creation
Integrated reporting
Corporate social responsibility (CSR)
Canadian extractive sector
Sustainability
Stakeholders
a b s t r a c t
In the wake of the global financial crisis, a new wave of stakeholder demands has developed calling on
companies to shift focus towards long-term value creation and moving away from a short-term earnings
emphasis. Aligned with these demands, urgent calls for more transparency and improved reporting on
both financial as well as non-financial reports have been made. The objective of this study was to analyze
longitudinal disclosure quality and quantity trends in reporting on long-term value creation of 19
publicly traded Canadian energy and mining companies. Content analysis was conducted in order to
assess disclosure on long-term value creation in annual financial and sustainability reports. The empirical
results show that the companies experienced a substantial increase in the reporting disclosure quality
and quantity. This was true for both disclosure in the annual financial reports as well as in the sus-
tainability reports. These results supported the hypotheses that Canadian public energy and mining
companies had increased their quantity and quality of long-term value creation disclosure in 2014 as
compared to 2012. Even though increases in disclosure quality could be observed (especially in the areas
of governance, responsible work practices, outside relationships and risk management), overall disclo-
sure quality (especially in areas such as connectivity between financials and sustainability sections,
materiality analysis, projects with high climate risk exposure, cost of energy, responsible work practices,
ince.
The document discusses green auditing, including planning, areas of concern, reporting, and implementation. It provides an overview of the necessity of green audits and differences between internal/external audits. Key aspects of audit planning discussed are engagement circumstances, risks, intended users, and standards like AA1000. Areas of concern addressed include regulations, waste management, and supply chain risks. Reporting guidelines from India, GRI, and benefits of reporting are covered. Implementation is shown to involve deciding to report, identifying impacts and audiences, and assuring and publishing the final report.
The document discusses green audit planning and reporting. It covers the necessity of green audits, audit planning considerations like engagement risks and intended users, areas of concern to audit like safety and waste management, and reporting guidelines. Reporting provides benefits like better performance measurement, stakeholder trust, and strategic advantages. In India, reporting is voluntary though the Companies Act requires some environmental reporting. Most large Indian companies follow Global Reporting Initiative guidelines in their sustainability reports.
Novel R&D Capabilities as a Response to ESG Risks-Lessons From Amazon’s Fusio...IJMIT JOURNAL
Environmental, Social, and Governance (ESG) management is essential for transforming corporate
financial performance-oriented business strategies into Finance (F) + ESG optimization strategies to
achieve the Sustainable Development Goals (SDGs).
In this trend, the rise of ESG risks has divided firms into two categories. Former incorporates a growthmindset that creates a passion for learning, and urges it to improve itself by endeavoring Research and
development (R&D) -driven challenges, while the other category, characterized by risk aversion, avoids
challenging highly uncertain R&D activities and seeks more manageable endeavors.
This duality underscores the complexity of corporate R&D strategies in addressing ESG risks and
necessitates the development of novel R&D capabilities for corporate R&D transformation strategies
towards F + ESG optimization.
NOVEL R & D CAPABILITIES AS A RESPONSE TO ESG RISKS- LESSONS FROM AMAZON’S FU...IJMIT JOURNAL
Environmental, Social, and Governance (ESG) management is essential for transforming corporate
financial performance-oriented business strategies into Finance (F) + ESG optimization strategies to
achieve the Sustainable Development Goals (SDGs).
In this trend, the rise of ESG risks has divided firms into two categories. Former incorporates a growthmindset that creates a passion for learning, and urges it to improve itself by endeavoring Research and
development (R&D) -driven challenges, while the other category, characterized by risk aversion, avoids
challenging highly uncertain R&D activities and seeks more manageable endeavors.
This duality underscores the complexity of corporate R&D strategies in addressing ESG risks and
necessitates the development of novel R&D capabilities for corporate R&D transformation strategies
towards F + ESG optimization.
Building on this premise, this paper conducts an empirical analysis, utilizing reliable firms data on ESG
risk and brand value, with a focus on 100 global R&D leader firms. It analyzes R&D and actions for ESG
risk mitigation, and assesses the development of new functions that fulfill F + ESG optimization through
R&D. The analysis also highlights the significance of network externality effects, with a specific focus on
Amazon, a leading R&D company, providing insights into the direction for transforming R&D strategies
towards F + ESG optimization.
The dynamics of stakeholder engagement in F + ESG optimization are indicated with the example of
amazon's activities. Through the analysis, it became evident that Amazon's capacity encompassing growth
and scalability, specifically its ability to grow and expand, is accelerating high-level research and
development by gaining the trust of stakeholders in the "synergy through R&D-driven ESG risk
mitigation."
Finally, as examples of these initiatives, the paper discussed the Climate Pledge led by Amazon and the
transformation of Japan's management system.
The Determinants of Integrated Reporting Quality: an Empirical Analysis Francesco Bavagnoli
1) The study examines the determinants of integrated reporting quality using a sample of 165 integrated reports from 55 companies between 2013-2015.
2) The results show that assurance and region are important determinants, with integrated reporting quality being higher for companies located in countries where integrated reporting is mandatory and in Europe.
3) Firm size, leverage, profitability, and industry type did not show significant associations with integrated reporting quality as hypothesized, requiring further analysis with a larger sample.
1) The document examines the relationship between corporate social responsibility (CSR) and financial performance of Chinese listed companies, analyzing how CSR may have a deferred effect on improving financial metrics like return on assets (ROA) and return on equity (ROE).
2) It uses ordinary least squares regression to model the impact of current and previous years' CSR performance scores on current financial performance, controlling for factors like company size, earnings per share, industry, and age.
3) Preliminary results suggest CSR may not generate immediate financial gains but could improve financial performance over longer periods as CSR benefits materialize for stakeholders and boost a company's reputation, market share, and ultimately profits.
Building Institutional Capacity in Thailand to Design and Implement Climate P...UNDP Climate
23-25 November 2016, Thailand - A centerpiece of the Integrating Agriculture in National Adaptation Plans Programme (NAP-Ag) in Thailand is its support to develop a new five-year Strategy on Climate Change in Agriculture (2017-2021). This is spearheaded by the Ministry of Agriculture and Cooperatives (MOAC) and its Office of Agriculture Economics (OAE). The strategy was unveiled after a series of meetings by a Technical Working Group at a three-day workshop held on 23-25 November 2016 in Bangkok, organized by UNDP.
Over 60 participants from each MOAC line department and 10 participants from academia and civil society were briefed by the Office of the Natural Resources and Environmental Policy and Planning (ONEP) and GIZ on the status of the National Adaption Plan (NAP) and learned how NAP-Ag programme efforts could support a broader NAP process and align with the Sector Plan. The new strategy focuses on improving evidence and data for informing policy choices, building the capacity of farmers and agri-businesses to adapt, promoting low-carbon development and productivity growth in the sector, and building institutional and managerial capacities to cope with climate change impacts.
A Hybrid Approach Based On Multi-Criteria Decision Making And Data-Based Opti...Sarah Marie
This document describes a hybrid approach using multi-criteria decision making and data-based optimization to solve the portfolio selection problem. In the first phase, suitable companies for investment are initially selected by considering criteria from literature on financial distress. In the second phase, a mathematical model determines optimal investment in each company based on risk and return criteria. The results show the most important criterion is cash adequacy ratio, while the least important is operating profit. Certain companies are prioritized for investment. The model finds solutions under uncertainty by considering scenario analysis of company prioritization changes.
Three new sustainability reporting standards from the Global Reporting Initiative (GRI) took effect in January 2021. The standards address water stewardship (GRI 303), occupational health and safety (GRI 403), and tax transparency (GRI 207). The standards provide guidance for companies to measure and report their impacts in these key areas and will help firms respond to stakeholder demands for transparency.
ESG Global Enterprise Pulse Survey 2023 ReportTanya Gupta
SG Analytics’ ESG Global Enterprise Pulse Survey highlights the ever-evolving ESG landscape and relevant reporting aligned with sustainability demands.
Download Now - https://www.sganalytics.com/esg-enterprise-survey-report/
1) The document summarizes the OECD guidance on transition finance, which aims to ensure the credibility of corporate climate transition plans. It outlines key challenges in transition finance and elements that make transition plans credible.
2) Over half of global greenhouse gas emissions come from energy and industry. Transition finance is mainly provided through sustainability-linked bonds and loans to help companies implement net-zero plans.
3) Credible transition plans should set science-based net-zero targets, outline strategies to meet interim goals, and integrate climate metrics into financial reporting to ensure accountability.
This document provides an overview of True Corporation's approach to sustainability. It discusses:
1) Key global challenges like climate change, digital transformation, and inclusive capital that frame True's sustainability strategy.
2) True's materiality analysis and stakeholder engagement process to identify priority sustainability issues.
3) True's sustainability goals for 2030 across issues like climate resilience, education, cybersecurity, and responsible supply chain management.
4) Highlights of True's sustainability performances to date, such as installing solar panels and supporting tele-health initiatives during COVID-19.
5) True's recognition for sustainability through international indices and awards.
DEMYSTIFYING CLIMATE TRANSITION SCENARIOS - Ryan WhisnantGreenBiz Group
The document provides an overview of climate transition scenarios for the food, agriculture and forest products sectors developed by the World Business Council for Sustainable Development (WBCSD). It includes:
1) Details on 5 new climate transition scenarios for these sectors modeled through 2050 that explore different pathways for climate policy implementation and technology development.
2) An online climate scenario tool that allows users to explore impacts on production, prices, markets and other business variables for 23 agricultural commodities under each scenario.
3) Guidance on how companies can apply scenario analysis and the tool to inform strategic planning, target setting, reporting and other business needs.
OECD Green Talks LIVE: Moving the world economy to net zero: the role of tran...OECD Environment
To meet the temperature goals of the Paris Agreement, decarbonisation measures will need to be financed across all sectors of the economy — most importantly in energy-intensive and hard-to-abate sectors in emerging markets and developing economies. As governments and the private sector ramp up their net-zero pledges, grapple with the ongoing energy crisis and face rising inflation, how to achieve those goals is increasingly put into question.
In the midst of these challenges, market actors and jurisdictions have ramped up efforts around transition finance, such as developing taxonomies and guidelines. But transition finance is often criticised for opening the door to greenwashing and risking emission-intensive lock-in. How can we ensure the development of robust corporate transition plans to support credible and meaningful transition investments towards net zero? And how can emission-intensive lock-in and greenwashing be avoided?
Experts on transition finance and transition planning will present and discuss their importance for moving to net-zero pathways in hard-to-abate sectors and emerging markets and developing economies, as well as outstanding challenges in this space. The presentation will draw from the recent report OECD Guidance on Transition Finance: Ensuring Credibility of Corporate Climate Transition Plans (Find the report here: https://oe.cd/transition-fin), which proposes 10 key elements to help corporates in developing transition plans, financiers to identify credible investment opportunities, and policymakers to develop strong policy frameworks.
More information: https://www.oecd.org/env/green-talks-live.htm
Material Engagement (with suppliment included)Nawar Alsaadi
The document discusses the concept of "Material Engagement" which involves identifying priority UN Sustainable Development Goals (SDGs), scanning them against the Sustainability Accounting Standards Board's (SASB) materiality map, and identifying laggard companies within relevant sectors. It recommends engaging with companies using an 8-step process to define the engagement scope, set key performance indicators and milestones, select an engagement approach, and establish an escalation strategy. The goal is to focus engagement efforts on the most financially material ESG issues as defined by SASB in order to drive tangible outcomes through the identified ESG transmission channels and progress on priority SDGs.
- The document discusses a study on the effects of bank-insurance mergers and acquisitions (M&As) on shareholder value.
- Preliminary results from the event study analysis show that M&As in the sample generated positive abnormal returns overall, indicating positive wealth effects. Specifically, bank bidders saw significantly positive returns around the announcement dates.
- However, insurance bidders' returns were insignificant, conflicting with some prior studies that found both types of bidders experienced wealth changes. The results so far are limited but provide initial evidence on the shareholder impacts of bancassurance M&As.
Materiality matrix use and misuse: a new impression management technique ?Francesco Bavagnoli
This document summarizes a research paper that examines how companies use materiality matrices from an impression management perspective. The researchers analyzed 23 sustainability reports from European financial companies. They found that companies often lack disclosure around stakeholder identification and engagement methods. Most companies use colors and sizing to describe issues, but only half measure issue importance numerically. There is a tendency for reported issues to be highly aligned between business relevance and stakeholder relevance, raising potential selection bias concerns. Only 39% of companies explicitly approve their materiality matrix. The researchers believe some impression management techniques may be used but more research is needed.
This document discusses sustainability reporting. It defines sustainability reports as disclosures about an organization's economic, environmental, and social impacts that are integrated with corporate reporting. Sustainability reports reveal the relationship between strategy and commitment to sustainability. The Global Reporting Initiative (GRI) establishes standards for sustainability reporting, dividing standards into general disclosures and topic-specific standards covering economic, environmental and social impacts. Regulations in some countries require certain organizations to publish sustainability reports.
The second consecutive year Alaya Consulting conducted a research on the ESG disclosure of the top 200 listed companies in Hong Kong by market capitalization.
Assessing social and economic impacts of building materialsJeremy Gibberd
This document summarizes and evaluates methodologies for assessing the social and economic sustainability impacts of building materials. It reviews lifecycle assessment and other environmental methodologies, finding limited tools for social and economic measures. The paper explores applying existing standards like the Global Reporting Initiative and ISO 26000 to building materials in South Africa. It concludes that while current tools provide a starting point, no system fully supports standardized social and economic impact assessments for building products. A new index approach is proposed to fill this gap.
The document discusses sustainability reporting and frameworks for reporting. It provides definitions and explanations of sustainability reporting, its importance, and common frameworks used like the GRI Standards. The GRI framework is explained in depth, including its development, structure, principles, and types of performance indicators. National and global scenarios for sustainability reporting are also summarized.
global reporting initiative & sustainability reportingNidhi Mathai
The document discusses sustainability reporting and the Global Reporting Initiative (GRI) framework for sustainability reporting. It provides information on:
- What sustainability reporting is and its importance for companies.
- The GRI sustainability reporting framework, including its principles, standard disclosures, and sector supplements.
- How the GRI framework has evolved over time from G3 to G4 guidelines.
- Key performance indicators reported in sustainability reports across economic, environmental, social, and governance topics.
- National and global trends in sustainability reporting adoption.
Presentation delivered at the Women in Finance Conference, South Africa.
The presentation deals with Integrated Sustainability Reporting, South Africa, 2010.
O relatório contém informações sobre o estado da Indústria e as práticas do Módulo de Resiliência, aproveitando um conjunto de dados global exclusivo para fornecer uma visão geral da maneira como as empresas e os fundos de ativos imobiliários estão gerenciando o risco e a resiliência climáticos.
As descobertas mostram que algumas empresas desenvolveram e executaram programas relativamente abrangentes; no entanto, a maioria das empresas possui programas parciais ou fragmentados, geralmente sem elementos-chave, como metas de desempenho ou métricas operacionais.
O relatório abrange os resultados do relatório de fundos imobiliários, fundos de infraestrutura e ativos de infraestrutura e detalha as várias maneiras pelas quais os fundos estão enfrentando o desafio da resiliência nas frentes de risco de transição, risco físico e risco social. Ele também analisa os resultados do Módulo nos quatro pilares usados pela Força-Tarefa do Conselho de Estabilidade Financeira sobre Divulgações Financeiras Relacionadas ao Clima (TCFD):
• Governança
• Estratégia
• Gerenciamento de riscos
• Métricas e destinos
Essa análise fornece informações sobre áreas importantes para aprimoramento, e o relatório fornece sete recomendações acionáveis para investidores e empresas de ativos imobiliários que trabalham para melhorar seu gerenciamento de riscos e resiliência climáticos. Informações adicionais do relatório incluem como as principais empresas de ativos imobiliários demonstram inovação por meio de uma variedade de práticas relacionadas à resiliência, quais cenários estão usando para gerenciar riscos relacionados ao clima e informações sobre a distribuição de práticas de resiliência entre os principais stakeholders.
Environmental reporting practices in annual report of selected listed compani...Alexander Decker
This document summarizes a research study that analyzed environmental disclosure practices in the annual reports of 30 listed companies in Bangladesh. The study found that on average, companies disclosed information for only 15.23% of the 56 expected environmental items. It also found a significant correlation between disclosure volume and company size as measured by total assets. The study concluded that Bangladeshi companies are providing very limited environmental information in their annual reports and more disclosure is needed to increase stakeholder awareness of environmental issues.
Audit Quality and Environment, Social, and Governance RisksCSCJournals
This study examines the association between a firm’s environment, social and governance (ESG) risks and audit quality. We measure audit quality using two proxies: audit fees and discretionary accruals. ESG risk is measured using Representative Risk Index from the RepRisk AG database. Using a sample of public U.S. firms from the period between 2007 and 2016, we find that there is positive association between audit fess and ESG risk implying that firms pay higher audit fees when their ESG risk increase in order obtain higher quality audit services. We also find that there is a negative relationship between ESG risk measures and discretionary accruals suggesting firms assessed having high ESG risks do not manage their earnings as much. Overall, our results indicate that auditors take ESG risks of a firm into account when performing financial statements audit.
[To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
This PowerPoint compilation offers a comprehensive overview of 20 leading innovation management frameworks and methodologies, selected for their broad applicability across various industries and organizational contexts. These frameworks are valuable resources for a wide range of users, including business professionals, educators, and consultants.
Each framework is presented with visually engaging diagrams and templates, ensuring the content is both informative and appealing. While this compilation is thorough, please note that the slides are intended as supplementary resources and may not be sufficient for standalone instructional purposes.
This compilation is ideal for anyone looking to enhance their understanding of innovation management and drive meaningful change within their organization. Whether you aim to improve product development processes, enhance customer experiences, or drive digital transformation, these frameworks offer valuable insights and tools to help you achieve your goals.
INCLUDED FRAMEWORKS/MODELS:
1. Stanford’s Design Thinking
2. IDEO’s Human-Centered Design
3. Strategyzer’s Business Model Innovation
4. Lean Startup Methodology
5. Agile Innovation Framework
6. Doblin’s Ten Types of Innovation
7. McKinsey’s Three Horizons of Growth
8. Customer Journey Map
9. Christensen’s Disruptive Innovation Theory
10. Blue Ocean Strategy
11. Strategyn’s Jobs-To-Be-Done (JTBD) Framework with Job Map
12. Design Sprint Framework
13. The Double Diamond
14. Lean Six Sigma DMAIC
15. TRIZ Problem-Solving Framework
16. Edward de Bono’s Six Thinking Hats
17. Stage-Gate Model
18. Toyota’s Six Steps of Kaizen
19. Microsoft’s Digital Transformation Framework
20. Design for Six Sigma (DFSS)
To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations
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ESG Global Enterprise Pulse Survey 2023 ReportTanya Gupta
SG Analytics’ ESG Global Enterprise Pulse Survey highlights the ever-evolving ESG landscape and relevant reporting aligned with sustainability demands.
Download Now - https://www.sganalytics.com/esg-enterprise-survey-report/
1) The document summarizes the OECD guidance on transition finance, which aims to ensure the credibility of corporate climate transition plans. It outlines key challenges in transition finance and elements that make transition plans credible.
2) Over half of global greenhouse gas emissions come from energy and industry. Transition finance is mainly provided through sustainability-linked bonds and loans to help companies implement net-zero plans.
3) Credible transition plans should set science-based net-zero targets, outline strategies to meet interim goals, and integrate climate metrics into financial reporting to ensure accountability.
This document provides an overview of True Corporation's approach to sustainability. It discusses:
1) Key global challenges like climate change, digital transformation, and inclusive capital that frame True's sustainability strategy.
2) True's materiality analysis and stakeholder engagement process to identify priority sustainability issues.
3) True's sustainability goals for 2030 across issues like climate resilience, education, cybersecurity, and responsible supply chain management.
4) Highlights of True's sustainability performances to date, such as installing solar panels and supporting tele-health initiatives during COVID-19.
5) True's recognition for sustainability through international indices and awards.
DEMYSTIFYING CLIMATE TRANSITION SCENARIOS - Ryan WhisnantGreenBiz Group
The document provides an overview of climate transition scenarios for the food, agriculture and forest products sectors developed by the World Business Council for Sustainable Development (WBCSD). It includes:
1) Details on 5 new climate transition scenarios for these sectors modeled through 2050 that explore different pathways for climate policy implementation and technology development.
2) An online climate scenario tool that allows users to explore impacts on production, prices, markets and other business variables for 23 agricultural commodities under each scenario.
3) Guidance on how companies can apply scenario analysis and the tool to inform strategic planning, target setting, reporting and other business needs.
OECD Green Talks LIVE: Moving the world economy to net zero: the role of tran...OECD Environment
To meet the temperature goals of the Paris Agreement, decarbonisation measures will need to be financed across all sectors of the economy — most importantly in energy-intensive and hard-to-abate sectors in emerging markets and developing economies. As governments and the private sector ramp up their net-zero pledges, grapple with the ongoing energy crisis and face rising inflation, how to achieve those goals is increasingly put into question.
In the midst of these challenges, market actors and jurisdictions have ramped up efforts around transition finance, such as developing taxonomies and guidelines. But transition finance is often criticised for opening the door to greenwashing and risking emission-intensive lock-in. How can we ensure the development of robust corporate transition plans to support credible and meaningful transition investments towards net zero? And how can emission-intensive lock-in and greenwashing be avoided?
Experts on transition finance and transition planning will present and discuss their importance for moving to net-zero pathways in hard-to-abate sectors and emerging markets and developing economies, as well as outstanding challenges in this space. The presentation will draw from the recent report OECD Guidance on Transition Finance: Ensuring Credibility of Corporate Climate Transition Plans (Find the report here: https://oe.cd/transition-fin), which proposes 10 key elements to help corporates in developing transition plans, financiers to identify credible investment opportunities, and policymakers to develop strong policy frameworks.
More information: https://www.oecd.org/env/green-talks-live.htm
Material Engagement (with suppliment included)Nawar Alsaadi
The document discusses the concept of "Material Engagement" which involves identifying priority UN Sustainable Development Goals (SDGs), scanning them against the Sustainability Accounting Standards Board's (SASB) materiality map, and identifying laggard companies within relevant sectors. It recommends engaging with companies using an 8-step process to define the engagement scope, set key performance indicators and milestones, select an engagement approach, and establish an escalation strategy. The goal is to focus engagement efforts on the most financially material ESG issues as defined by SASB in order to drive tangible outcomes through the identified ESG transmission channels and progress on priority SDGs.
- The document discusses a study on the effects of bank-insurance mergers and acquisitions (M&As) on shareholder value.
- Preliminary results from the event study analysis show that M&As in the sample generated positive abnormal returns overall, indicating positive wealth effects. Specifically, bank bidders saw significantly positive returns around the announcement dates.
- However, insurance bidders' returns were insignificant, conflicting with some prior studies that found both types of bidders experienced wealth changes. The results so far are limited but provide initial evidence on the shareholder impacts of bancassurance M&As.
Materiality matrix use and misuse: a new impression management technique ?Francesco Bavagnoli
This document summarizes a research paper that examines how companies use materiality matrices from an impression management perspective. The researchers analyzed 23 sustainability reports from European financial companies. They found that companies often lack disclosure around stakeholder identification and engagement methods. Most companies use colors and sizing to describe issues, but only half measure issue importance numerically. There is a tendency for reported issues to be highly aligned between business relevance and stakeholder relevance, raising potential selection bias concerns. Only 39% of companies explicitly approve their materiality matrix. The researchers believe some impression management techniques may be used but more research is needed.
This document discusses sustainability reporting. It defines sustainability reports as disclosures about an organization's economic, environmental, and social impacts that are integrated with corporate reporting. Sustainability reports reveal the relationship between strategy and commitment to sustainability. The Global Reporting Initiative (GRI) establishes standards for sustainability reporting, dividing standards into general disclosures and topic-specific standards covering economic, environmental and social impacts. Regulations in some countries require certain organizations to publish sustainability reports.
The second consecutive year Alaya Consulting conducted a research on the ESG disclosure of the top 200 listed companies in Hong Kong by market capitalization.
Assessing social and economic impacts of building materialsJeremy Gibberd
This document summarizes and evaluates methodologies for assessing the social and economic sustainability impacts of building materials. It reviews lifecycle assessment and other environmental methodologies, finding limited tools for social and economic measures. The paper explores applying existing standards like the Global Reporting Initiative and ISO 26000 to building materials in South Africa. It concludes that while current tools provide a starting point, no system fully supports standardized social and economic impact assessments for building products. A new index approach is proposed to fill this gap.
The document discusses sustainability reporting and frameworks for reporting. It provides definitions and explanations of sustainability reporting, its importance, and common frameworks used like the GRI Standards. The GRI framework is explained in depth, including its development, structure, principles, and types of performance indicators. National and global scenarios for sustainability reporting are also summarized.
global reporting initiative & sustainability reportingNidhi Mathai
The document discusses sustainability reporting and the Global Reporting Initiative (GRI) framework for sustainability reporting. It provides information on:
- What sustainability reporting is and its importance for companies.
- The GRI sustainability reporting framework, including its principles, standard disclosures, and sector supplements.
- How the GRI framework has evolved over time from G3 to G4 guidelines.
- Key performance indicators reported in sustainability reports across economic, environmental, social, and governance topics.
- National and global trends in sustainability reporting adoption.
Presentation delivered at the Women in Finance Conference, South Africa.
The presentation deals with Integrated Sustainability Reporting, South Africa, 2010.
O relatório contém informações sobre o estado da Indústria e as práticas do Módulo de Resiliência, aproveitando um conjunto de dados global exclusivo para fornecer uma visão geral da maneira como as empresas e os fundos de ativos imobiliários estão gerenciando o risco e a resiliência climáticos.
As descobertas mostram que algumas empresas desenvolveram e executaram programas relativamente abrangentes; no entanto, a maioria das empresas possui programas parciais ou fragmentados, geralmente sem elementos-chave, como metas de desempenho ou métricas operacionais.
O relatório abrange os resultados do relatório de fundos imobiliários, fundos de infraestrutura e ativos de infraestrutura e detalha as várias maneiras pelas quais os fundos estão enfrentando o desafio da resiliência nas frentes de risco de transição, risco físico e risco social. Ele também analisa os resultados do Módulo nos quatro pilares usados pela Força-Tarefa do Conselho de Estabilidade Financeira sobre Divulgações Financeiras Relacionadas ao Clima (TCFD):
• Governança
• Estratégia
• Gerenciamento de riscos
• Métricas e destinos
Essa análise fornece informações sobre áreas importantes para aprimoramento, e o relatório fornece sete recomendações acionáveis para investidores e empresas de ativos imobiliários que trabalham para melhorar seu gerenciamento de riscos e resiliência climáticos. Informações adicionais do relatório incluem como as principais empresas de ativos imobiliários demonstram inovação por meio de uma variedade de práticas relacionadas à resiliência, quais cenários estão usando para gerenciar riscos relacionados ao clima e informações sobre a distribuição de práticas de resiliência entre os principais stakeholders.
Environmental reporting practices in annual report of selected listed compani...Alexander Decker
This document summarizes a research study that analyzed environmental disclosure practices in the annual reports of 30 listed companies in Bangladesh. The study found that on average, companies disclosed information for only 15.23% of the 56 expected environmental items. It also found a significant correlation between disclosure volume and company size as measured by total assets. The study concluded that Bangladeshi companies are providing very limited environmental information in their annual reports and more disclosure is needed to increase stakeholder awareness of environmental issues.
Audit Quality and Environment, Social, and Governance RisksCSCJournals
This study examines the association between a firm’s environment, social and governance (ESG) risks and audit quality. We measure audit quality using two proxies: audit fees and discretionary accruals. ESG risk is measured using Representative Risk Index from the RepRisk AG database. Using a sample of public U.S. firms from the period between 2007 and 2016, we find that there is positive association between audit fess and ESG risk implying that firms pay higher audit fees when their ESG risk increase in order obtain higher quality audit services. We also find that there is a negative relationship between ESG risk measures and discretionary accruals suggesting firms assessed having high ESG risks do not manage their earnings as much. Overall, our results indicate that auditors take ESG risks of a firm into account when performing financial statements audit.
Similar to ESG and risk mitigation effect. How sustainable scores impact on firms' probabilities of default (20)
[To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
This PowerPoint compilation offers a comprehensive overview of 20 leading innovation management frameworks and methodologies, selected for their broad applicability across various industries and organizational contexts. These frameworks are valuable resources for a wide range of users, including business professionals, educators, and consultants.
Each framework is presented with visually engaging diagrams and templates, ensuring the content is both informative and appealing. While this compilation is thorough, please note that the slides are intended as supplementary resources and may not be sufficient for standalone instructional purposes.
This compilation is ideal for anyone looking to enhance their understanding of innovation management and drive meaningful change within their organization. Whether you aim to improve product development processes, enhance customer experiences, or drive digital transformation, these frameworks offer valuable insights and tools to help you achieve your goals.
INCLUDED FRAMEWORKS/MODELS:
1. Stanford’s Design Thinking
2. IDEO’s Human-Centered Design
3. Strategyzer’s Business Model Innovation
4. Lean Startup Methodology
5. Agile Innovation Framework
6. Doblin’s Ten Types of Innovation
7. McKinsey’s Three Horizons of Growth
8. Customer Journey Map
9. Christensen’s Disruptive Innovation Theory
10. Blue Ocean Strategy
11. Strategyn’s Jobs-To-Be-Done (JTBD) Framework with Job Map
12. Design Sprint Framework
13. The Double Diamond
14. Lean Six Sigma DMAIC
15. TRIZ Problem-Solving Framework
16. Edward de Bono’s Six Thinking Hats
17. Stage-Gate Model
18. Toyota’s Six Steps of Kaizen
19. Microsoft’s Digital Transformation Framework
20. Design for Six Sigma (DFSS)
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A select set of project management best practices to keep your project on-track, on-cost and aligned to scope. Many firms have don't have the necessary skills, diligence, methods and oversight of their projects; this leads to slippage, higher costs and longer timeframes. Often firms have a history of projects that simply failed to move the needle. These best practices will help your firm avoid these pitfalls but they require fortitude to apply.
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IMPACT Silver is a pure silver zinc producer with over $260 million in revenue since 2008 and a large 100% owned 210km Mexico land package - 2024 catalysts includes new 14% grade zinc Plomosas mine and 20,000m of fully funded exploration drilling.
Navigating the world of forex trading can be challenging, especially for beginners. To help you make an informed decision, we have comprehensively compared the best forex brokers in India for 2024. This article, reviewed by Top Forex Brokers Review, will cover featured award winners, the best forex brokers, featured offers, the best copy trading platforms, the best forex brokers for beginners, the best MetaTrader brokers, and recently updated reviews. We will focus on FP Markets, Black Bull, EightCap, IC Markets, and Octa.
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[To download this presentation, visit:
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This presentation is a curated compilation of PowerPoint diagrams and templates designed to illustrate 20 different digital transformation frameworks and models. These frameworks are based on recent industry trends and best practices, ensuring that the content remains relevant and up-to-date.
Key highlights include Microsoft's Digital Transformation Framework, which focuses on driving innovation and efficiency, and McKinsey's Ten Guiding Principles, which provide strategic insights for successful digital transformation. Additionally, Forrester's framework emphasizes enhancing customer experiences and modernizing IT infrastructure, while IDC's MaturityScape helps assess and develop organizational digital maturity. MIT's framework explores cutting-edge strategies for achieving digital success.
These materials are perfect for enhancing your business or classroom presentations, offering visual aids to supplement your insights. Please note that while comprehensive, these slides are intended as supplementary resources and may not be complete for standalone instructional purposes.
Frameworks/Models included:
Microsoft’s Digital Transformation Framework
McKinsey’s Ten Guiding Principles of Digital Transformation
Forrester’s Digital Transformation Framework
IDC’s Digital Transformation MaturityScape
MIT’s Digital Transformation Framework
Gartner’s Digital Transformation Framework
Accenture’s Digital Strategy & Enterprise Frameworks
Deloitte’s Digital Industrial Transformation Framework
Capgemini’s Digital Transformation Framework
PwC’s Digital Transformation Framework
Cisco’s Digital Transformation Framework
Cognizant’s Digital Transformation Framework
DXC Technology’s Digital Transformation Framework
The BCG Strategy Palette
McKinsey’s Digital Transformation Framework
Digital Transformation Compass
Four Levels of Digital Maturity
Design Thinking Framework
Business Model Canvas
Customer Journey Map
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3. Introduction
Paris Agreement - ONU
Agenda for Sustainable Development – ONU
Action Plan: Financing Sustainable Growth – European
Commission
Guidelines on Loan Origination and Monitoring - EBA
3
4. Literature Review
4
• ESG metrics can increase firms’ creditworthiness, in fact, both ESG individual components
and ESG overall score is able to reduce companies’ probability of default (Sassen et al., 2016;
Devalle et al., 2017; De Santis et al., 2020; Höck et al., 2020; Jang et al., 2020);
• Another research stream considers CDS spread as a proxy for credit risk (Hübel, 2020; Barth
et al., 2021);
• Multiple studies have found different contributions in reducing firms’ probability of default for
each ESG component:
o environmental (Sassen et al., 2016; Gibson, 2021) ;
o social (Stellner et al., 2015; Bhattacharya and Sharma, 2019);
o governance (Cash, 2018; Kiesel and Lücke, 2019).
• There is a problem inherent the lack of uniformity and transparency of the methods for
detecting ESG metrics (Stubbs, 2016; Avetisyan and Hockerts, 2017);
5. Literature Review
5
• An increased attention of national regulation expressed in terms of environment
safeguard, social and governance inequality reduction can considerably amplify the
effect of ESG performance on credit worthiness. Indeed, the risk mitigation effect
triggered by ESG performance improvement it is more evident in countries with a
consolidated and strong attention to environment protection, social and governance
issues. In fact, ESG metrics have a greater impact in the reduction of EU firms’
probability of default rather than American ones (Liang and Renneboog, 2017; Kim et al.,
2021; Barth et al., 2021);
• Early literature studied the effect of ESG metrics on credit worthiness considering only a
one-year perspective, ignoring long term implication. ESG criteria should represent a
managerial incentive to take long term choices (Henisz and McGlinch, 2019);
6. 6
• ESG criteria can be exploited in rating methods improving the predicting power of credit
rating algorithms (Klein, 2019; Michalski and Low, 2020);
• Exist a positive correlation among ESG performance and corporate profitability (Kim and Li,
2021).
• The problem of the lack of uniformity regarding ESG indicators has been faced in a paper
that observed three different types of divergence: (1) scope divergence; (2) measurement
divergence; (3) weight divergence (Berg et al., 2019; Christensen et al., 2021);
Literature Review
7. 7
• According to stakeholder theory the interest of the firm in environmental and social issues is
rewarded by the market in terms of performance and consequently increasing firm value
(Clarkson, 1995; Donaldson and Preston, 1995);
• Corporate performance cannot be split by risk dimensions, according to the paradigm of risk-
return, increases in risk levels are related to higher returns (Fama, 1971; Bettis and Mahajan,
1985; Campbell and Viceira, 2005);
• In accordance with stakeholder theory, an increased attention in social and governance issue
will lead to a better consolidation of company relationships with government and financial
community, improving firm reputation and brand value (McGuire et al., 1988; Brown and Dacin,
1997);
• The development of social and governance attention constitutes an indicator for excellent
management abilities and the availability of high-quality workforce (Turban and Greening 1997;
Waddock and Graves 1997; Greening and Turban, 2000);
• All these factors contribute to the reduction of financial risks and lowers the likelihood of
financial distress (Oikonomou et al., 2012).
Theoretical background
8. 8
HYP1: ESG performance variation has a major impact on firms’
probability of default on longer time horizons.
Theoretical background
9. 9
• After the issue of the final version of IFRS 9 by International Accounting Standard Board
(IASB), a noticeable attention is assumed by the banking sector for models able to estimate
firms’ multiperiod default probability (Duffie et al, 2007; Xu, 2016; Gubareva, 2021);
• The implementation of ESG metrics into loan assessment and on-going evaluation became
mandatory following the introduction of loan origination monitoring guidelines issued by
European Banking Authority (EBA, 2019; EBA, 2020a; EBA, 2020b; EBA, 2020c; EBA, 2021);
• Companies in sectors most exposed to environmental problems will benefit most from positive
changes in the ESG profile. On the other side, on the market will exist firms that because of
their core business, technical impediments or exogenous issues react less to ESG
performance (Eccles et al., 2012).
Theoretical background
10. 10
HYP2: ESG performance impact on probability of default changes in
function of the sector to which a firm belongs.
Theoretical background
11. Database and Methodology
11
Number of firms Index N. Firms
50 EUROSTOXX 15%
20 BEL 20 6%
40 CAC40 12%
30 DAX30 9%
100 FTSE100 30%
35 IBEX 10%
20 SMI 6%
40 FTSE MIB 12%
335 Sum 100%
The initial dataset 335 European firms (2010-2020) + Bloomberg Industry Classification
Systems (BICS)
ESG scoring disclosure available starting from 2015;
Bloomberg PD calculated over a time horizon of 1, 2, 3, 4 and 5 years.
Code Sectors N %
MAT Materials 16 14%
DIS Consumer Discretionary
Products 16 14%
IND Industrials 18 16%
HEA Health care 12 11%
TEC Technology 9 8%
CON Consumer Staples 13 12%
COM Communication 11 10%
ENE Energy 5 5%
UTI Utilities 11 10%
Sum 111 100%
12. Database and Methodology
12
Code Variable Fonte
ZSC Altman Z-Score Bloomberg
B1Y Bloomberg PD 1 year Bloomberg
B2Y Bloomberg PD 2 years Bloomberg
B3Y Bloomberg PD 3 years Bloomberg
B4Y Bloomberg PD 4 years Bloomberg
B5Y Bloomberg PD 5 years Bloomberg
ENV Environment Disclosure Bloomberg
GOV Governance Disclosure Bloomberg
SOC Social Disclosure Bloomberg
ESG ESG Total Disclosure Bloomberg
BIC Bloomberg Industry Classification System Bloomberg
The unavailability of data referring to the Z-Score and the ESG report for two periods
after 2015 represents the trigger for missing observation elimination. Finally, the
companies subject to double listing were eliminated, and the data used refer to the
index of the country at which the firm belongs 111 firms and 10.410 observations.
14. Database and Methodology
14
with: (i) 𝑃𝐷𝑖𝑡 = probability of default with yearly time frame t, (t=1;2;3;4;5); (ii) 𝛼 = constant;
(iii) 𝑍𝑆𝐶𝑖𝑡 = Z-Score; (iv) 𝐸𝑁𝑉𝑖𝑡 = environmental score; (v) 𝑆𝑂𝐶𝑖𝑡 = social score; (vi) 𝐺𝑂𝑉𝑖𝑡 =
governance score; (vii) 𝐷𝑡𝑖𝑚𝑒𝑖𝑡
= dummy which takes a value of 1 for the years after 2014 and
0 in the other cases; (viii) 𝐷𝑡𝑟𝑚𝑖𝑡
= dummy which takes value 1 in the group of companies
treated and 0 in the rest; (ix) 𝐷𝑡𝑟𝑚𝑖𝑡
∗ 𝐷𝑡𝑚𝑖𝑡
= interaction variable that assumes a value of 1 in
the case of companies belonging to the treatment group for the years after 2014; (x) 𝑢𝑖𝑡 =
error term.
𝑃𝐷𝑖𝑡 = 𝛼 + ß1 ∗ 𝑍𝑆𝐶𝑖𝑡 + ß2 ∗ 𝐸𝑁𝑉𝑖𝑡 + ß3 ∗ 𝑆𝑂𝐶𝑖𝑡 + ß4 ∗ 𝐺𝑂𝑉𝑖𝑡 + 𝛾1 ∗ 𝐷𝑡𝑖𝑚𝑒𝑖𝑡
+ 𝛾2 ∗ 𝐷𝑡𝑟𝑚𝑖𝑡
+ 𝜆1 ∗ 𝐷𝑡𝑟𝑚𝑖𝑡
∗ 𝐷𝑡𝑖𝑚𝑒𝑖𝑡
+ 𝑢𝑖𝑡
15. Database and Methodology
15
Before ESG (2010-
2015)
After ESG (2015-2020) After - Before
Control Firms 𝛼 𝛼 + 𝛾1 𝛾1
Treatment Firms 𝛼 + 𝛾2 𝛼 + 𝛾1 + 𝛾2 + 𝜆1 𝛾1 + 𝜆1
Control - Treatment 𝛾2 𝛾2 + 𝜆1 𝜆1
16. Database and Methodology
16
with: (i) 𝑃𝐷𝑖𝑡 = probability of default with yearly time frame t, (t=1;2;3;4;5); (ii) 𝛼 = constant and utility
sector given the omission of a sector; (iii) 𝑍𝑆𝐶𝑖𝑡 = Z-Score; (iv) 𝐸𝑁𝑉𝑖𝑡 = environmental score; (v) 𝑆𝑂𝐶𝑖𝑡 =
social score; (vi) 𝐺𝑂𝑉𝑖𝑡 = governance score; (vii) 𝑀𝐴𝑇𝑖𝑡 = dummy for materials sector; (viii) 𝐷𝐼𝑆𝑖𝑡 =
dummy for discretionary product sector; (ix) 𝐼𝑁𝐷𝑖𝑡 = dummy for industrial sector; (x) 𝐻𝐸𝐴𝑖𝑡 = dummy for
health sector; (xi) 𝑇𝐸𝐶𝑖𝑡 = dummy for technology sector; (xii) 𝐶𝑂𝑁𝑖𝑡 = dummy for consumer staple
sector; (xiii) 𝐶𝑂𝑀𝑖𝑡 = dummy for communication sector; (xiv) 𝐸𝑁𝐸𝑖𝑡 = dummy for energetic sector; (xv)
𝐷𝑡𝑖𝑚𝑒𝑖𝑡
= dummy which takes a value of 1 for the years after 2014 and 0 in the other cases; (xvi)
𝐷𝑡𝑟𝑚𝑖𝑡
= dummy which takes value 1 in the group of companies treated and 0 in the rest; (xvii) 𝐷𝑡𝑟𝑚𝑖𝑡
∗
𝐷𝑡𝑚𝑖𝑡
= interaction variable that assumes a value of 1 in the case of companies belonging to the
treatment group for the years after 2014; (xviii) 𝑢𝑖𝑡 = error term.
𝑃𝐷𝑖𝑡
= 𝛼 + ß1 ∗ 𝑍𝑆𝐶𝑖𝑡 + ß2 ∗ 𝐸𝑁𝑉𝑖𝑡 + ß3 ∗ 𝑆𝑂𝐶𝑖𝑡 + ß4 ∗ 𝐺𝑂𝑉𝑖𝑡 + 𝛿1 ∗ 𝑀𝐴𝑇𝑖𝑡 + 𝛿2 ∗ 𝐷𝐼𝑆𝑖𝑡 + 𝛿3 ∗ 𝐼𝑁𝐷𝑖𝑡 + 𝛿4 ∗ 𝐻𝐸𝐴𝑖𝑡 + 𝛿5
∗ 𝑇𝐸𝐶𝑖𝑡 + 𝛿6 ∗ 𝐶𝑂𝑁𝑖𝑡 + 𝛿7 ∗ 𝐶𝑂𝑀𝑖𝑡 + 𝛿8 ∗ 𝐸𝑁𝐸𝑖𝑡 + 𝛾1 ∗ 𝐷𝑡𝑖𝑚𝑒𝑖𝑡
+ 𝛾2 ∗ 𝐷𝑡𝑟𝑚𝑖𝑡
+ 𝜆1 ∗ 𝐷𝑡𝑟𝑚𝑖𝑡
∗ 𝐷𝑡𝑖𝑚𝑒𝑖𝑡
+ 𝑢𝑖𝑡
22. Conclusion
22
Tendency observed in literature a firm is able to reduce its own probability of default
through the improvement of ESG performance.
Not every component of ESG scoring has the same importance:
• time-based analysis: social sphere accounts for the most in the enhancement of firms’
credit worthiness;
• time-sectorial analysis: the social dimension accounts only for the reduction of 1-year
probabilities of default other horizons environmental score improvements.
23. Conclusion
23
Contributions:
1. confirmation of the default risk mitigation effect increases as the default likelihood reference
time increases. Banks can adequately assess firms’ credit worthiness involving adjusted
probabilities of default for ESG performance with time spans greater than 1 year;
2. Through the validation of hypothesis 1 we have also identified the existence of a time lag
between ESG compliant strategies and the effects on firms’ probability of default. This lag is
generated by the dynamics linked to reputation; any improvement that impact on corporate
dimension require a non-negligible amount of time to be perceived by the market;
3. existence of a differential effect in firms’ risk mitigation effect in function of the sector at which a
company belongs banks can dynamically define the amount of capital that they desire to
allocate on a specific sector and geographical area, coherently with their risk appetite framework,
and adjust their allocation according to sectorial sensibility to ESG scoring improvement.
24. Conclusion
24
The present study is characterized by model limits:
1. we assume that Z-score is able to express the entire profile of risk represented by
balance sheet items, but it doesn’t consider the risk appetite framework and the
strategic plan;
2. the sample refers only to European listed companies, but we do not consider
different geographical area neither SME;
3. probabilities of default are strictly correlated with market cycles dynamics;
4. the time period took in consideration is characterized by unconventional monetary
policy, such as, negative interest rates and quantitative easing.
25. Conclusion
25
Future studies could try to implement a sensitivity analysis to reveal the influence of exogenous
variables on probability of defaults. In addition, observing a more geographically diversified sample
verify the persistence of the time lag effect in risk mitigation effect.