NEWSLETTER of February 25, 2022

The following content has been added at finexpert:

PwC
2022 EU PRIVATE MARKETS: ESG REBOOT
This evolving landscape has changed the course of the global political agenda, with significant knock-on effects on global financial markets. In this new backdrop, ESG and sustainable finance will become a matter of survival to meet the needs of sustainability-conscious investors, increased regulatory requirements and societal expectations. In this context, ESG investing is evolving into a veritable paradigm shift – particularly within the EU. >more

FTI Andersch | HHL Leipzig Graduate School of Management
AUSWIRKUNGEN VON COVID-19 AUF PE-PORTFOLIOUNTERNEHMEN 2021
The pandemic has had a discernible impact on exit decisions and holding periods of private equity funds in German-speaking countries. In the survey conducted by FTI-Andersch and the Center for Corporate Transactions and Private Equity (CCTPE) at HHL Leipzig Graduate School of Management, 56 percent of the PE funds surveyed said that COVID-19 had 'strongly' influenced their decision, with four percent even saying it had 'very strongly' influenced their decision. For the future, 68 percent of the respondents expect the holding period to be extended. >more

BDO
NACHHALTIGKEITSBERICHTERSTATTUNG: 10 FRAGEN, AUF DIE VORSTÄNDE EINE ANTWORT HABEN SOLLTEN
The field of sustainability reporting is developing at an unprecedented pace. The demand for companies to report on sustainability in a consistent manner around the world is growing louder and louder - from shareholders as well as at the government level. This English-language publication from BDO provides answers to 10 questions that all board members should know if they want to drive an organization's sustainability reporting. >more

Kearney
EUROPE’S URGENT NEED TO INVEST IN A LEADING-EDGE SEMICONDUCTOR ECOSYSTEM
Today’s chip shortage has put a spotlight on the degree to which the European economy depends on semiconductors. With limited local production capability and capacity, Europe risks its technological sovereignty and needs to correct course to maintain long-term competitiveness. >more

POLITICAL BETA
Raymond J. Fisman, April M. Knill, Sergey Mityakov, and Margarita Portnykh
2021
Using a portfolio theory framework, we introduce the concept of political beta to model firm-level export diversification in response to global political risk. Our model predicts that firms are less responsive to changes in political relations with lower beta countries – those that contribute less to the firm’s total political risk. We document patterns consistent with our model using disaggregated Russian firm-by-destination-country data during 2001-2011: Trade is positively correlated with political relations, though the effect is far weaker for trading partners whose political relations with Russia are relatively uncorrelated with those of other partners in a firm’s export portfolio. >more

THE IMPACT OF IMPACT INVESTING
Jonathan Berk, and Jules H. van Binsbergen
2021
We evaluate the quantitative impact of ESG divestitures. For divestitures to have impact they must change the cost of capital of affected firms. We derive a simple expression for the change in the cost of capital as a function of three inputs: (1) the fraction of socially conscious capital, (2) the fraction of targeted firms in the economy and (3) the correlation between the targeted firms and the rest of the stock market. Given the current state of ESG investment we find that the impact on the cost of capital is too small to meaningfully affect real investment decisions. We empirically corroborate these small estimates by studying firm changes in ESG status. When firms are either included or excluded from the leading socially conscious US index (FTSE USA 4Good) we find no detectable effect on the cost of capital. We conclude that current ESG divesture strategies have had little impact and will likely have little impact in the future. Our results suggest that to have impact, instead of divesting, socially conscious investors should invest and exercise their rights of control to change corporate policy. >more