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IMAP Fall 2021 Newsletter

A Message from the Executive Director

Dear Friends and Colleagues of the IMAP,

I am proud to share many updates in this first newsletter of Boston University’s Impact Measurement and Allocation Program (IMAP). We now have several projects underway!

The IMAP seeks to improve the quality and coverage of ESG data available to investors. We are not seeking to develop a single score, but rather improve many ESG indicators so that individual values may be applied to a more transparent set of investment options. By working in collaboration with industry leaders, we will ensure the results of our academic research are connected to changes in practice. Our conversations with professionals in the investment industry thus far have highlighted two areas of priority for the IMAP: carbon-emissions reporting and human capital.

Currently, we have projects underway addressing the following questions:

  • More and more companies are declaring net-zero or carbon-reduction targets for their future. How can investors determine which carbon targets are at risk?
  • Are today’s ESG disclosures consistent with SASB recommendations?
  • How do ESG ratings influence the judgements and decisions of various stakeholders?
  • Is more regulation required to appropriately incorporate climate risk in asset pricing?

I look forward to sharing the results of these projects with you as they become available. In the meantime, I hope you find value in the below recent publications of our affiliated faculty.

Finally, for those who I have not yet met, I joined BU in January as the IMAP’s first Executive Director. I am an engineer who spent the last twelve years in the Boston office of a German environmental sustainability software and consulting firm. Most recently, I was their North American Director of Consulting and Innovation. I am excited to now leverage my deep knowledge of Life Cycle Assessment and how corporate and product carbon footprints are calculated to address the ESG challenges of the financial industry. I hope to meet you on zoom or at one of our upcoming events.

Sincerely,

Susan Fredholm Murphy

Recent Publications by IMAP Affiliated Faculty

Caroline Flammer, Michael W. Toffel, & Kala Viswanathan’s:
Shareholder activism and Firms’ Voluntary Disclosure of Climate Change Risks
finds that in the absence of mandated disclosure requirements, shareholder activism can elicit greater disclosure of firms’ exposure to climate change risks. Furthermore, environmental shareholder activism increases the voluntary disclosure of climate change risks, especially if initiated by institutional investors, and even more so if initiated by long-term institutional investors. Companies that voluntarily disclosed climate change risks following environmental shareholder activism achieved a higher valuation post disclosure, suggesting that investors value transparency with respect to firms’ exposure to climate change risks.

Madison Condon’s
Market Myopia’s Climate Bubble
explains how inaccurate and incomplete incorporation of climate change-related risks into asset pricing exists at the level of individual assets.

Kenneth Pucker’s
The Trillion Dollar Fantasy: Linking ESG Investment with Planetary Impact
tries to size the ESG market and assess claims of alpha and impact. It ultimately concludes that alpha remains unproven, impact is mostly an afterthought, and the rationale for much of the asset management industry is rooted in self interest. While impact investing is laudable and the fast growth of Climatetech (venture capital to drive planetary solutions) is really encouraging…addressing E and S challenges requires government action to reset the rules.

Andrew A. King and Kenneth P. Pucker’s
Heroic Accounting
explains the problems with the idea of trying to create a single dollar-value measure of a firms net goodness. They find this approach impossible to implement accurately and perilous to try.

Upcoming Events

Monthly Lunch Seminars:
The IMAP will begin hosting a monthly lunch seminar in order to build and strengthen our community of affiliated faculty, students and industry professionals. The sessions will be held in-person in the Questrom School of Business at BU. Vaccinated individuals within the Boston-area are welcome to join us for lunch in-person. Masks are required indoors within all BU facilities unless actively eating or drinking. Socially-distant seating will be provided in the room in order to allow participants to eat during the presentation.

A zoom option will be available for those interested but unable to attend in-person. In order to facilitate frank conversations between participants, the Q&A of these sessions will not be recorded. If interested in joining, please email Susan Murphy at sfmurphy@bu.edu for more details.

Webinars:
We will also host more formal webinars open to a larger audience. Stay tuned for more information on those in a future newsletter. In the meantime, you may be interested in some of these PRI academic webinars hosted by our own Caroline Flammer.

About the IMAP

Boston University’s Impact Measurement and Allocation Program was founded thanks to generous donations to the University by those who want to see improvements in the ESG data made available to financial investors. We are a joint venture of the Questrom Business School’s Susilo Institute for Ethics in the Global Economy and the university-wide Institute for Sustainable Energy. Our ties to both of these Institutes allow us to leverage interdisciplinary teams to solve current business challenges.

We are furthermore aided in our mission to produce impactful research via our Advisory Board of industry leaders. To contribute to our program, or learn more about it, please email sfmurphy@bu.edu
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