Caroline Flammer, Associate Professor at Boston University, presented her study at the 4th Geneva Summit on Sustainable Finance. She won the Most Innovative Paper Award. This prize is awarded by SFG and its members.
Her paper and her career in 5 questions:
What is your paper about?
“The past five years have seen explosive growth in corporate green bonds issued to finance climate-friendly projects. Despite this “green bond boom,” little is known about this financial innovation. In particular, do green bonds deliver on their promise and yield improvements in companies’ environmental footprint? Or are they merely a form of greenwashing? This study finds that green bonds are indeed effective — they not only yield improvements in companies’ environmental footprint, but also in financial performance. Moreover, they boost green innovations and attract long-term and green investors. Overall, these findings suggest that green bonds represent a powerful instrument in impact investing to fight climate change — an instrument that can be used by the private sector regardless of (the lack of) government actions.”
Read paper here
What is sustainable finance for you?
“In my research, I examine whether and how companies’ social and environmental responsible (CSR) practices can improve their competitiveness and long-term value creation. And, relatedly, how well‐designed governance structures with long‐term and CSR components can incentivize managers to engage in such practices. The insights of my studies suggest that the “E” (environment) and “S” (society) components of ESG are an integral part of “G” (governance). As such, social and environmental responsible practices are core to good corporate governance and sustainable finance.”
Which challenges will face this growing sector?
“In my view, sustainable finance faces a lot of opportunities (as opposed to challenges) to help tackle some of the world’s most pressing challenges and reaching the United Nation’s Sustainable Development Goals. Identifying these opportunities (and limitations) are a promising area for both future research and practice in sustainable finance. A key for doing so will be the development of appropriate social and environmental performance metrics as well as standardization in corporate reporting and disclosure practices.”
What are the most interesting innovations in sustainable finance?
“One relatively recent innovation in sustainable finance is the use of corporate green bonds. Based on the findings of my study entitled “Corporate Green Bonds,” this financial innovation holds great promise in the fight against climate change as it improves both the financial and environmental performance of the issuing firms. Moreover, it helps attract a longer-term and green investor clientele — which is particularly important in light of the rising concerns about shareholder pressure and corporate short-termism.”
“I am an Associate Professor and Dean’s Research Scholar at Boston University’s Questrom School of Business. I also serve as the Academic Director of the Social Impact MBA program. Before joining Boston University, I was a faculty at Ivey Business School (Canada) and a postdoctoral researcher at MIT Sloan School of Management. I hold a PhD in economics from the University of St. Gallen in Switzerland.”