Editor’s Letter

Welcome to the Winter issue of The Journal of Impact & ESG Investing.

In this issue, we continue our focus on climate-related investing issues. Last year, we launched the S&P Global Academic ESG Research Award, in partnership with S&P Global, to deliver pioneering research. Scholarly research plays a key role in helping to navigate the transition to a low-carbon, sustainable, and equitable economy by establishing new areas of inquiry and generating new insights that can help move the whole field forward. This award allows academics to propose an environmental, social, and governance (ESG)-related research article. Authors of the winning proposal receive access to S&P’s ESG data to use for their research. The article also undergoes peer review as part of the publication process for The Journal of Impact and ESG Investing. We received excellent proposals from teams around the globe for this year’s award.

We open the issue with our special section on climate change. Thiagarajan, Lacaille, Mocuta, and Im analyze the impact of climate change on the macroeconomic issues that influence monetary and fiscal policy. Furdak, Nilsen-Ames, and Wang then discuss how carbon emissions can be viewed through three connected but distinct lenses known as Scope 1, 2, and 3. They show how these lenses can help investors conceptualize and calculate carbon emissions at company and portfolio levels, but subjective interpretations remain an issue.

Next, Heurtebize, Chen, Soupé, and Leote de Carvalho address the question of how to predict carbon emissions for companies that have yet to report theirs by proposing a framework based on statistical learning techniques that predicts Scope 1 and 2 corporate carbon emissions.

To conclude the section, we are pleased to present the winner of the 2022 S&P Global Academic ESG Research Award. The winning article is “Measuring and Optimizing the Risk and Reward of Green Portfolios” by Andrew Lo, Ruixan Zhang, and Chaoyi Zhao.

Burson, Banta-Ryan, and Swidler then examine sustainable companies as measured by ESG metrics to see if they efficiently use their assets in a way that leads to lower risks and potentially positive alpha. Their analysis considers whether high-ESG stocks imply superior company performance during times of market stress or volatility.

Next, Mills looks at cannabis industry practices to see whether ESG risks exist. The results suggest that ESG risks are high. In the final article, Sokolov, Mostovoy, Losing, Ceccarelli, Zhang, Zhang, Laurion, Jackson, and Seco use machine learning to examine the interplay between ESG factors and fund flows.

As always, we welcome your submissions. We value your comments and suggestions, so please email us at journals{at}investmentresearch.org.

Brian R. Bruce

Editor-in-Chief

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