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Green window dressing

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Jean-Baptiste Vaujour is a Professor of Practice at emlyon business school where he teaches about consulting and green finance. He is an energy economist and a registered expert at the EU Commission and for the World Energy Council. He has recently published a book on the decarbonisation of the economy.   I recently read a paper by Gianpaolo Parise and Mirco Rubin called Green Window Dressing in which they present evidence of optimising behaviour from investment managers. This is part of a wider trope of unintended consequences of the current ESG reporting framework. We will discuss a few of these in the present article. Optimising timing There is a fundamental issue with the ESG disclosure framework as it is currently defined in the SFDR ( Sustainable Finance Disclosure Regulation ). The frequency of reporting for the SFDR and EU taxonomy alignment is yearly. Fund ESG performances are reported quarterly to asset managers. On the other hand, the financial performance of por
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Understanding carbon pricing trajectories

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Jean-Baptiste Vaujour is a Professor of Practice at emlyon business school where he teaches about consulting and green finance. He is an energy economist and a registered expert at the EU Commission and for the World Energy Council. He has recently published a book on the decarbonisation of the economy.   Source: https://tradingeconomics.com/commodity/carbon Carbon pricing has become a cornerstone of environmental policies around the world. According to the latest World Bank tally , 110 carbon pricing instruments have been implemented, covering 53 countries, either through taxes or carbon markets. According to theory, carbon prices provide a clear price signal to the actors of the economy and informs them of the environmental cost of their pollution. They then have a clear incentive to reduce their emissions if they wish to reduce the associated bottom-line impact. The central question in this framework is to determine what the optimal carbon price should be. Pricing a commodity
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Green finance is a common language

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  Jean-Baptiste Vaujour is a Professor of Practice at emlyon business school where he teaches about consulting and green finance. He is an energy economist and a registered expert at the EU Commission and for the World Energy Council. He has recently published a book on the decarbonisation of the economy.   In this article, we explore the stakes around the emergence of a common language when stakeholders discuss green finance.   Based in economic theory, this requirement has been a constant request from market participants and a major regulatory achievement for the European Commission. Unfortunately, it is also only a prerequisite to actual environmental impact and even so, it already faces challenges and strong headwinds. Economic theory requires transparent information for efficient decisions Most of economic theory rests on the idea that market channel information to stakeholders in a transparent, immediate and free way. Investors can then decide on an efficient allocation o
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