Dean Dana Brown, Sprott School of Business, Carleton University

Cathy Clark, Duke University, USA

Moderator: Karim Harji

Session Chair: Grace Adams, Sprott School of Business, Carleton University

Paper A: Valuing the Impact of Affordable Housing in Ontario

Brierley, T. and Geobey, S

Abstract: Ontario is facing an affordable housing crisis. As of 2016, 12.7% of Canadian households were in core housing need. This issue is especially prominent in Ontario as 15.3% households were in core housing need, with 75% being attributed exclusively to a lack of affordability (Gov’t of Ontario, 2020). Much of the shortage is attributed to an insufficient supply. The project is part of a multi-stakeholder initiative to create an assessment framework to value affordable housing projects, grounded in academic theory and practice. The purpose of this research project is to identify social, environmental, and indirect economic contributions of affordable housing projects. Further, it seeks to understand which contributions are cost-effective to monitor and exploring how these can be employed to better understand the value of affordable housing. These learnings are then deployed to develop a methodology for estimating the social return of affordable housing projects.
The framework will employ the Common Approach to Impact Measurement (CAIM) standard, a 5-step process for impact measurement used by impact investors, social enterprises in Ontario, and supported by the Canadian Social Finance Fund. The study uses a mixed methods design including a structured content analysis of existing literature, semi-structured interviews with professionals, a stakeholder questionnaire to determine weighting of indicators, and stakeholder verification of the final framework. 
The assessment framework is intended for use by organizations to evaluate their affordable housing projects, efficiently allocate funding, and advocate for additional funding. The framework will help give organizations the ability to economically measure the social impact of projects to encourage increased investment and more holistic planning. The project intends to contribute to existing literature in the areas of affordable housing valuation, social finance, and impact measurement. 

Paper B: Identifying greenhouse gas emissions throughout the supply chain using the life cycle approach and the challenges of reflecting them in accounting and financial indicators.

Ghozlani, K. and Kumar, V.

Abstract: 2020 UN Financing Sustainable Development Report identified growing interests in sustainable finance that need to be nurtured. In this paper we analyse some of the challenges associated with capturing financial attributes that reflect the sustainability of underlying economic activities. 
Particularly, we consider greenhouse gas (GHG) emissions throughout the value chain of an actor and along the supply chain of a whole industry sector. We use supply chain methodologies such as Life Cycle Analysis to identify GHG emissions and associated leakages (i.e. material GHG emissions unaccounted for). These leakages often occur at the interface between successive layers of suppliers of an industry sector and might not be captured in its financial indicators.
Therefore, by identifying and accounting for carbon leakages of an industry, we present its true GHG footprint and quantify better the abatement of GHG if renewable energies are used instead.  This is important for sustainable finance for 3 reasons. 1- Various carbon pricing mechanisms use the value of the GHG abatement to price emissions, 2- End-customers are better informed when procuring products or services based on the total footprint of that industry and 3- Shareholders and stakeholders can exercise better judgements when considering an industry sector in its entirety.

Session Chair: D’Arcy O’Farrell, Sprott School of Business, Carleton University

Paper A: Assessing companies’ practices on decent work: an analysis of ESG rating methodologies

Louche, C., Delautre, G., and Balvedi Pimentel, G.

Abstract: ESG rating agencies  have  become  a  central  actor  in  providing  information  and  assessing companies on social environmental and governance (ESG) dimensions. Although research has explored the construction of ESG metrics, little is known about how agencies evaluate decent work. Building on the analysis of six ESG agencies, this paper investigates how these actors measure and assess companies on decent work-related items and identifies the challenges they face in this endeavour. The underlying question of the paper is to better understand the capacity of responsible investment and ESG screening in promoting and improving decent work.

Paper B: Catalyzing the growth of green bonds: A closer look at the drivers and barriers of this sustainable finance market in Canada

Saravade, V. and Weber, O.

Abstract Being the popular face of sustainable finance around the world, the green bond market provides the perfect opportunity to examine how the financial sector is reacting to the opportunities and risks posed by the shift towards the low-carbon climate resilient (LCR) economy. Given the role of such capital markets in driving debt financing towards various sectors and industries, it becomes important to understand what motivates financial sector decision-making as the risks become more apparent. Furthermore, resource-based economies like Canada are also in much need of reducing their financial sector’s exposure to fossil fuels and transitioning to a LCR economy before it’s too late. Hence, our study looked at the case of the Canadian green bond market and its participants to examine how they were driving growth in the market as well as achieving some aspect of transition. By undertaking key market interviews and conducting an online survey, our study found that green bonds were a key factor in mainstreaming the notion of sustainable finance through its explicit use of a green labels and establishing new norms like enhanced use-of-proceeds disclosures. Our results also suggested that market challenges like greenwashing and environmental impact or additionality needed to be considered for the market to reach its potential. Our recommendations to address these gaps and opportunities included involving more policymakers and regulators in the market, having a more scientifically backed, integrated and data-driven approach in how green bond impact gets measured as well as exploring new project areas like nature-based solutions or climate adaptation for future

The Intersection of Sustainability Accounting and Sustainable Finance

Moderator: Leanne Keddie, Sprott School of Business, Carleton University

Panelists:
Carol Adams, Durham University
Jan Bennington, University of Lancaster
Margaret Childe, Manulife Investment Management
Anna Young Ferris, University of Sydney

Description: This panel explores the intersection of sustainability accounting and sustainable finance with a focus on the need for urgent collaboration between these two realms. How can accounting and finance work together to create a more sustainable world? This will require good information about the impacts of sustainability challenges on firms as well as the impacts of firms on the world. Finance can direct the funds; accounting can provide the information to make good decisions. One critical hurdle to the effectiveness of these investments exists in the underlying measurement of these social and environmental criteria. We will discuss the current state of affairs, explore the limitations and (mis)use of sustainability accounting data in sustainable finance as well as where we need to go from here to create a more sustainable world.

Session Chair: Sana Mohsni, Sprott School of Business, Carleton University

Paper A: Regulation of Sustainable and Responsible Investment in Developing Countries

Tsikata, B. K.

Abstract: The financial market is seeing an effective, prudent and efficient increase, seen as a demand side development as today’s stakeholders and private equity investors are continuously venturing in liquid assets done in ways deemed socially responsible. As a result, the term paper offers a comprehensive background and lay emphasis on how the market for responsible investments has evolved over the years, the urgent need to introduce a robust Regulation to regulate activities in this market and at the same time, report on the importance of Regulation and how it helps to increase investment activities particularly in developing and emerging economies. Consequently, the contribution made in this term paper evaluates the theoretical underpinnings, if any, revolving on Sustainable and Responsible Regulation with relevance to related debates, regarding prudent investment approaches, stakeholder engagement, sustainable investments, corporate social responsibilities, and public funds. The Term paper examines these variables and establish how an effective introduction of Regulation in the SRI environment will    contribute positively to societal development. 
Thus, Current positive developments in the SRI environment presents an opportunity to examine both the benefits and the problems that will be associated with the impact of the implementation of the proposed Regulation. This term paper presents an opportunity for policy drafters to consider strongly the introduction of Sustainable and Responsible Regulation. Finally, the Term paper identifies relevant possible future areas of interest for research to academia. 

Paper B: Beyond the Shades: The Impact of Credit Rating and Greenness on the Green Bond Premium

Huynh, T., Ridder, N., and Wang, M.

Abstract: Green bonds are an innovative and rapidly growing fixed-income asset class that have significant potential in channelling funds towards climate and environmentally friendly investment projects, catalysing the transition to a more sustainable economy. This paper revisits the green bond premium and evaluates its determinants. For this purpose, 161 green bonds are matched with 322 conventional bonds from the same issuer that are also identical in terms of currency, rating, bond structure, seniority, collateral, and coupon type. Subsequently, yield differentials between the green and synthetic bonds are examined based on 71,440 daily observations from January 2016 to March 2021. The results provide significant evidence of an overall negative green bond premium, suggesting that green bonds experience lower yields than otherwise equivalent conventional bonds. The premium is significantly below zero across all continents observed and for both the financial and the government sector. On a cross-sectional average, the green bond premium equals -3.1 bps. The negative premium is more pronounced for green bonds with a lower credit rating. It is also stronger in the presence of an ESG rating and for bonds with a higher shade of green. Significant interaction effects between external review and rating provide evidence that the relationship between the green bond premium and the external review status depends on the bond’s credit rating, i.e., the external review status is more decisive for the green bond premium for bonds with a lower credit rating. The likelihood of obtaining such an external review, i.e., a second-party opinion, a third-party assurance, a green bond rating, or a certification mark, is positively correlated with proxies for social and environmental responsibility.

Session Chair: Shi Li, Sprott School of Business, Carleton University

Paper A: Regulation of Sustainable and Responsible Investment in Developing Countries

Tsikata, B. K.

Abstract :The financial market is seeing an effective, prudent and efficient increase, seen as a demand side development as today’s stakeholders and private equity investors are continuously venturing in liquid assets done in ways deemed socially responsible. As a result, the term paper offers a comprehensive background and lay emphasis on how the market for responsible investments has evolved over the years, the urgent need to introduce a robust Regulation to regulate activities in this market and at the same time, report on the importance of Regulation and how it helps to increase investment activities particularly in developing and emerging economies. Consequently, the contribution made in this term paper evaluates the theoretical underpinnings, if any, revolving on Sustainable and Responsible Regulation with relevance to related debates, regarding prudent investment approaches, stakeholder engagement, sustainable investments, corporate social responsibilities, and public funds. The Term paper examines these variables and establish how an effective introduction of Regulation in the SRI environment will    contribute positively to societal development. 
Thus, Current positive developments in the SRI environment presents an opportunity to examine both the benefits and the problems that will be associated with the impact of the implementation of the proposed Regulation. This term paper presents an opportunity for policy drafters to consider strongly the introduction of Sustainable and Responsible Regulation. Finally, the Term paper identifies relevant possible future areas of interest for research to academia. 

Paper B: Restorative Indigenous National Goal (RING) – Federal Corrections Reform Gibbons, J.C., Cape Breton University, Canada

Gibbons, J. C.

Abstract: RING (Restorative Indigenous National Goal). The RING Project will research the feasibility of the indigenous community being made responsible for Indigenous Canadians in federal prison in Canada going forward, initially scoped with a 500-person RING Stage I research project. The development of alternative incarceration programs, sustainable businesses and vocations are critical to achieving the intended RING program goals. 
The current cost of incarceration is C$117,000 per inmate per annum in Canada. The recidivism rate for indigenous prisoners runs much higher than for the overall prison population. Correctional Services Canada in a 2019 study found male indigenous recidivism rate (within 2 years of release) to be 38% versus 24% for the overall male inmate population. The project goal would be to see the indigenous recidivism rate drop to 20% or below (a 47% baseline reduction) within a decade. 
Canada’s indigenous population is made up of First Nations, Métis & Inuit and represent 5% of the population (it is also the fastest growing population with a birth rate 3.8x the Canadian average). Canada’s federal prison population is 28% indigenous. Canada currently has 40,000 prisoners in total. The number under federal custody (prison terms > 2 years) is 14,600, making the pool of indigenous federal prisoners 3,500. With each stage of RING contemplated at 500 indigenous inmates, an eventual RING stage VII could eventually see all federal indigenous prisoners Canada-wide domiciled on Cape Breton Island, Nova Scotia, Canada. 
RING, stage I research will expand the concepts of self-government and self-determination to self-correction/rehabilitation, a concept/methodology without precedent in Canada.
The marked over-representation of indigenous peoples in Canadian prisons has led some to call them the modern-day residential schools. 
“Hard work never killed a man. Men die of boredom, psychological conflict, and disease. They do not die of hard work.” – David Ogilvy 
Before we can answer the question if criminals can be good neighbours, we must answer the question,” Can convicted criminals make good workers?” RING Project Stage I, RING Farmed Salmon – Sustainable Protein will have the aim of helping to answer this question. 

Green Finance: Challenges and Prospects

Moderator: Isaac Ochtere, Sprott School of Business, Carleton University

Panelists:
Peter Elsworth, Ceres Investor Program
Priti Shokeen, TD Asset Management
Olaf Webber, University of Waterloo

Description: Most of the actions taken by the private sector including the issuance of green bonds and compulsory disclosure by companies are sometime seen as just greenwashing. The reason is that we lack granular information needed to assess and understand whether something is green. Some have called for intervention from legislators and regulators to correct market failures in green finance

The potential role of transition plans and transition finance in accelerating decarbonisation

Ben Caldecott, University of Oxford

Moderator: Amr Addas, Adjunct Professor, Finance, Concordia University

Message from our Sponsor: CPA Ontario

The Challenge of Quality Sustainability Data needed for Investment Decision-Making

Moderator: Tessa Hebb, Sprott School of Business, Carleton University

Panelists:
Charles Cho, Schulich School of Business, York University,
Gordon Clark, Smith School of Enterprise and the Environment, University of Oxford
Delphine Gibassier, Audenica Business School
Barbara Zvan, University Pension Plan

Description: ESG investing is growing in popularity around the world. These investors are looking for high-quality firms with strong environmental, social, and governance standards. A significant number of them have pledged to be net-zero in carbon emissions by 2050. But without high-quality, robust corporate sustainability data it is difficult for these investors to judge the veracity of the sustainability claims made by companies. This panel explores the sustainability data challenge investors face with data providers and with current company reporting.

Message from our Sponsor: Desjardins

Session Chair: Mohamad Al Guindy, Sprott School of Business, Carleton University

Paper A: Carbon Liquidity

Nerlinger, M. and Riordan, R.

Abstract: We study the impact of disclosing greenhouse gas emissions (CO2) on the liquidity of firms’ equity.  We find that firms that emit more carbon are less liquid.  However, firms that disclose emissions have lower bid-ask spreads than firms that do not.   This is partially because when firms first disclose their emissions their bid-ask spreads decrease by roughly 13%. These results hold for high information asymmetry firms, for high and low carbon intensity firms, and for early and late disclosing firms. These results should encourage regulators and firms to move quickly towards more, more robust, and more granular environmental disclosures.

Paper B: Where is the dollar sign? The effect of disclosure venue and the quantification of climate-related financial impact on professional investors’ judgments

Cheng, M. M., Young-Ferris, A., and Zhou, S.

Abstract: There is a growing recognition by investors that climate risk has potential to significantly impact company financial performance, which has led to a demand for climate-related financial disclosure (CFD). Against this background, the Task Force on Climate-related Financial Disclosure (TCFD) was established to develop recommendations for more effective CFD that could promote better understanding of the financial implications associated with climate change and better inform investment decisions.  Of specific interest to professional investors and one of the key goals of the TCFD is better disclosure of climate-related financial impact, that is, how climate-related risks and opportunities are likely to impact a company’s future financial position. In this experiment we examine professional investors’ reactions to two disclosure choices that a company can currently make regarding their voluntary CFD, namely, the disclosure venue (i.e., regulatory financial filing or sustainability report) and the quantification of climate-related financial impact (i.e., presence or absence of financial impact in dollar terms). Consistent with our predictions, we find that investors perceive CFD to be of higher quality when it is included in a company’s regulatory financial filing than in a stand-alone sustainability report. This finding supports the TCFD’s advocacy of providing CFD in regulatory financial filings. We also find that the quantification of climate-related financial impact has a further, positive impact on investors’ quality perception when the CFD is in a sustainability report, but has the opposite, unfavorable effect when the CFD is part of regulatory financial filings; we provide an additional psychology-based explanation for this effect.