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.

Social Finance: can (should) impact accounting be used to verify impact investors making a difference?

Moderator: Kate Ruff, Sprott School of Business, Carleton University

Panelists:
Diane-Laure Arjales, Ivey School of Business, Western University
Kelly Gauthier, Rally Assets
Laurie Mook, Arizona State University
James Tansey, University of British Columbia

Description: This panel will discuss the possibility (and desirability) of measuring impact for the purpose of verifying the claims of impact investing funds.  Impact investing is investing with the intent to affect positive change in society and the environment.  Impact accounting includes both the impact measurement practices within the investees and how those measures are reported to investors. The panel will explore three questions. 1) Are impact measures reliable enough and comparable enough to meet impact investors’ reporting expectations?  2) Given the known tensions between measurement for verification (measure to prove) and learning (measure to improve), what risk does demanding an impact accounting pose to the investees ability to improve impact? 3) What benefits to impact accounting, in its current form, offer to the impact investing industry?