The Research Initiative FDIR was created in 2007, and is codirected by Sébastien Pouget and Catherine Casamatta for TSE and Edouard Challe and Patricia Crifo for Ecole Polytechnique. It is backed by the competencies of a highly-qualified team of researchers that benefits from an international reputation. Under the guidance of the Association Française de la Gestion Financière (French Association for Financial Management, AFG), a dozen of asset management companies and other institutions investors have decided to fund this research inititiative in the areas of responsible investment and sustainable finance. In particular, its work has contributed to the emergence of new valuation models that take into account the long-term environmental and social consequences of firm behavior. A more precise description of the research themes addressed by the chair is available. Confronted with the emergence of a demand for savings management that takes into account non-financial criteria, the French asset management industry has offered socially responsible products including investment funds for several years. An investment is said to be socially responsible (SRI) if it optimizes the investment choice by not only taking into account financial criteria, but also by integrating environmental, social and governance (ESG) concerns. Today many investors perceive SRI as being an instrument aimed at a more sustainable development of our society, in other words “a development that meets the needs of current generations without compromising those of future generations”. The rapid development of the amount invested in SRI calls for a better understanding of their management, selection, validity and evaluation.
The main objectives of the Research Initiative FDIR are to:
- Contribute to objectivizing the arguments to show that the development of sustainable finance and responsible investment is – in today's world – not only necessary but also possible;
- Develop research methodologies allowing to better identify and integrate non-financial criteria into the analysis of value creation;
- Form a world-class scientific team on SRI.
To achieve these objectives, the Research Initiative FDIR carries out research around three main topics.
- Long-term ESG performance and risk evaluation
A lot of Environmental, Social, and Governance (ESG) factors play out in the long-run. This research theme aims at studying how to value the opportunities and risks of investment projects in the ESG domain. In this setting, researchers explore the link between Socially Responsible Investments and sovereign bonds. They also study how to model social risks and catastrophic risks (related to climate change, nuclear disasters and others), and how to value them (interest rates, risk premium,…).
- Corporate Governance
This research topic aims at studying the impact of various governance issues, such as directors' independence and expertise, governance arrangements, executive compensation or shareholders' horizon, on companies' economic, financial and extra-financial performance. The objective is to build both a coherent conceptual framework and a comprehensive empirical investigation on French as well as international financial markets.
- Shareholder engagement
Shareholder engagement aims at influencing corporate behavior. Engagement can take a number of forms from a dialogue between shareholders and executive, to seeking nominations on the board of directors, and to proposing resolutions and voting in shareholder meetings. The research carried out within the chair addresses various issues related to engagement. How do SRI investors develop their engagement and dialogue policy? What financial performance can be expected on extra-financial issues? What is the link between shareholder engagement and traditional best-in-class policies?