HKU Governance and Sustainability Seminar Series

Virtual Seminar

Thursday, February 20, 2025

Sustainable Investing: Evidence From the Field

Date and Time

February 20 (Thu) 5pm – 6:15pm HKT

Format
Online (75-minute online seminar)

Speaker & Moderator

Speaker

Prof. Alex Edmans

London Business School

Alex Edmans FBA FAcSS is Professor of Finance at London Business School. Alex has a PhD from MIT as a Fulbright Scholar, and was previously a tenured professor at Wharton and an investment banker at Morgan Stanley.

Alex’s research interests are in corporate finance, responsible business and behavioural finance. He is a Director of the American Finance Association; Vice President of the Western Finance Association; Fellow, Director, and Chair of the Ethics Committee of the Financial Management Association; Fellow of the British Academy; and Fellow of the Academy of Social Sciences. From 2017-2022 he was Managing Editor of the Review of Finance, the leading academic finance journal in Europe.

Moderator

Prof. Maxime Couvert

HKU Business School

Maxime Couvert is an Assistant Professor of Finance at the University of Hong Kong. Maxime received his PhD from the Swiss Federal Institute of Technology in Lausanne and the Swiss Finance Institute.

Maxime’s research interests include empirical corporate finance, corporate governance, sustainable finance, and institutional investors.

About this seminar

The inaugural seminar in this series features Prof. Alex Edmans of London Business School, sharing insights from his working paper titled “Sustainable Investing: Evidence From the Field.”

Paper Abstract

We survey 509 equity portfolio managers from both traditional and sustainable funds on whether, why, and how they incorporate firms’ environmental and social (“ES”) performance into investment decisions. ES performance influences stock selection, engagement, and voting for over three quarters of investors, including nearly two thirds of traditional investors. Financial considerations are a primary reason, even among sustainable funds. Few are willing to sacrifice financial returns for ES performance, largely due to fiduciary duty concerns, and voting and engagement are mainly driven by financial considerations. A second reason is constraints. Fund mandates, firmwide policies, or client wishes caused 71% to make stock selection, voting, or engagement decisions that they would otherwise not have. Some of these actions had financial consequences, such as avoiding stocks that would improve returns or diversification; others had ES consequences, such as avoiding stocks whose ES performance they could have improved.