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Socially Responsible Investment and Environmental Funding

Socially Responsible Investment and Environmental Funding. Christian GOLLIER IDEI Researcher Professor of Economics University Toulouse I. A new chair on SRI. Paris is key in the development of SRI funds.

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Socially Responsible Investment and Environmental Funding

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  1. Socially Responsible Investment and Environmental Funding Christian GOLLIERIDEI ResearcherProfessor of EconomicsUniversity Toulouse I

  2. A new chair on SRI • Paris is key in the development of SRI funds. • There is no agreed-upon methodology to evaluate assets according to their social and environmental performances. • There is not much evidence of the structure of the demand for SRI, or of the ethical, social and environmental preferences of investors. • There is no clear evidence and no theory of the effects of the emergence of the social responsability of investors • on asset prices, • on the cost of capital of firms, • and on their real investment decisions. • Based on this situation, 15 french players on SRI took the initiative to create a new chair on "Durable Finance and Responsible Investment". • It is a joint venture of the Ecole Polytechnique and the University of Toulouse (ranked 6th best department of economics in the world).

  3. A first set of questions • The economics of SRI is connected to many fields: environmental economics, psycho-economics, behavioural finance, law and economics, growth theory, public economics, decision theory under uncertainty,... • A subset of crucial questions are going to be examined over the next 3 years: • Evaluation of the investors' willingness to pay for a cleaner world, and its impact on the optimal asset allocation of SRI funds; • Economic analysis of the so-called "entrepreneurial short-termism". • Aggregation of investors' SR preferences and beliefs, and elaboration of a "SR CAPM". Could classical investors undo (and take advantage of) the actions of socially responsible investors? • How SR firms can signal their quality under asymmetric information? Cost of observability. Role of financial intermediaries and of rating agencies. Impact on governance. • How much should we do for future generations? • What should we do with the precautionary principle?

  4. Stockholm, Thursday, March 29, 2007 Paris, Gateway to Euro Capital Markets

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