Early detection of sustainability-related controversies permits reputational risk attribution to specific companies and the evaluation of subsequent material effects on prices. Controversy mapping is currently one of the most actively developing areas in financial natural language processing (NLP) analytics, network analysis, and sentiment analysis.  This session will comprise short presentations followed by a panel discussion aimed at addressing key data challenges in controversy mapping.  We will focus on real ‘big data’ sources, such as unstructured high-frequency text data derived from digital news and social media platforms, and their use to establish the links between controversies and share prices, understand the role of ‘market memory’ in market moves, and the material effects of controversy strength. 

Early detection of sustainability-related controversies permits reputational risk attribution to specific companies and the evaluation of subsequent material effects on prices. Controversy mapping is currently one of the most actively developing areas in financial natural language processing (NLP) analytics, network analysis, and sentiment analysis.  This session will comprise short presentations followed by a panel discussion aimed at addressing key data challenges in controversy mapping.  We will focus on real ‘big data’ sources, such as unstructured high-frequency text data derived from digital news and social media platforms, and their use to establish the links between controversies and share prices, understand the role of ‘market memory’ in market moves, and the material effects of controversy strength.

Stewardship and engagement enjoy a surging popularity in the sustainable investing field. In the UK, the recent release of the UK Stewardship Code has only accelerated this trend. Stewardship is meant to promote longer-term value for investors, promote high standards of corporate governance at the individual company level, and create sustainable benefits for the economy, environment, and society. Engagement and voting are tools of stewardship and investors increasingly use them to communicate their priorities and standpoints to companies. Engagements are also done collaboratively to pool resources in addressing system-level issues, such as climate change. Yet, what really is the value and purpose of interactions such as engagements, and how can this value be captured? This session will review the current developments and best practices in stewardship and assess how these differ in different asset classes. What can investors and companies do to make the best of engagements? And how should engagement be reported on? Since engagements are often culturally contingent, we also discuss whether and how stewardship is appropriate in Asian, African and or South American markets.

Halting and reversing the ongoing loss and degradation of nature and its biodiversity are amongst the greatest challenges of our time. The current state of play is deeply worrying. The drivers of habitat destruction and biodiversity loss continue and we are not yet able to deploy capital into nature recovery at the scale or pace required, whether at global, national or subnational levels. Nor are we able to properly measure and manage nature-related risks in economic and financial decision-making. This needs to change incredibly quickly.

This session, organised in partnership with the Leverhulme Centre for Nature Recovery at Oxford, will focus on what we should be testing and scaling to shift capital flows. We will explore what needs to happen to create a global financial architecture able to fund and finance nature recovery, how financial regulation and supervision could drive transformations in financial practice, and innovations in measuring nature-related financial risks.

Litigation has the potential to help drive the transition to a net zero economy by holding corporations and financial entities to their net zero transition plans, and to re-allocate capital where liability risks are priced into financial decision-making. Yet the risks, opportunities and impacts of climate litigation are not widely understood by financial market participants, regulators and academics alike. We will explore the role of law and litigation in holding companies and financial institutions to account for a failure to prepare, disclose or implement net zero transition plans. What role can and should investors and financial institutions play to support litigation to align corporate and financial decision-making with climate goals? How can litigation risk be factored into financial decision-making? What are the implications for efforts by financial institutions, investors, credit rating agencies and prudential regulators looking to use this analysis in financial decision-making and capital regulation?

Current backward-looking financial risk management practices are insufficient to capture the long-term horizon and fundamental uncertainty associated with climate change. Various central banks have run or are planning to run forward-looking climate stress tests that examine the effects of a wide range of physical and transition risk scenarios on the stability of the financial system.

This session will discuss current best practices, and the future of climate stress testing as well as its potential over the next 10 years.

Physical risk is often seen as more remote than transition risk, particularly for wealthier countries. But COVID has taught us that risks can interact in complex ways and cascade globally. This session will draw upon the evidence on systemic risks related to physical climate shocks, including compound risks and cascading global physical risks. In this session, we will showcase the latest science in this area and identify potential hot spots of risk. 

Sustainability-linked loans and bonds can effectively promote credible transitions by borrowers and issuers. Their main innovation lies in the way they tie the cost of capital with sustainability performance. As a new financial instrument, they face multiple challenges and risks. A few examples include the comparability, relevance and ambition of metrics, as well as the materiality of penalties and discounts in the cost of capital. This session will provide an overview of the challenges and opportunities arising in the sustainability-linked debt markets and how to build a robust framework for selecting key performance indicators while ensuring a credible corporate transition.