The E-axes Forum on Climate Change, Macroeconomics, and Finance

Michela Scatigna & Omar Zulaica - Banking Department, BIS

“Achievements and challenges in ESG markets”

Event description

Michela Scatigna and Omar Zulaica will present their recent paper (joint with Dora Xia, Anna Zabai) on “Achievements and challenges in ESG markets”. From the abstract:

Financial markets can support the transition to a more sustainable and fairer economy by influencing firms’ funding costs. To explore this mechanism, we study the extent to which investors respond to signals about the environmental or social benefits stemming from given projects or firms. We find evidence of a carbon risk premium: debt from entities with a higher carbon footprint trades at marginally higher yields, all else the same. We also document that investors are willing to pay a social premium – which we refer to as “socium” – when a firm issues a social rather than a conventional bond. The magnitudes of the carbon risk premium and socium are modest but non-negligible in some industrial sectors and market segments. Some obstacles – such as “ESG washing” – stand in the way of further ESG market deepening, limiting contributions to sustainable development.

Moderator:

Pierre Monnin
Senior Fellow, CEP

Michela Scatigna

Asset management specialist, Banking Department
Michela Scatigna joined the BIS in 2001, and has worked on a variety of research projects related to international economics and financial institutions. After joining the BIS, she took a two-year sabbatical during which she worked in a commercial bank in Spain as a senior economist analysing international real estate markets. Ms Scatigna holds a BS in economics from the University of Rome III and an MSc in economics from the Collegio Carlo Alberto in Turin, Italy.

Omar Zulaica

Senior Asset Management Specialist, Banking, Reserve Management Advisory Services
Omar Zulaica joined the BIS in 2017. He supports central banks in their reserve management activities and the BIS in its asset management capacities, with a special focus on strategic asset allocation. Before joining the Bank, he worked for over six years at the Bank of Mexico, where he was Head of Strategic Asset Allocation in the directorate of foreign reserves. He’s earned a BSc in Actuarial Science from Instituto Tecnológico Autónomo de México (ITAM) and an MSc in Financial Economics from the University of Oxford.

Paper and slides

Achievements and challenges in ESG markets (Paper)

Achievements and challenges in ESG markets (Slides)

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