AAU studies the climate impact of investments

AAU studies the climate impact of investments

A new research project investigates how financial investments affect the climate and how the climate impact of various investments affect their return characteristics.

Among investors around the world, there is a growing environmental concern. The new research project “Climate Finance” seeks to improve our understanding of the interaction between investments, environment and returns. Project leader and Professor of Finance at Aalborg University Business School Frederik Lundtofte sees several signs of the growing climate concerns in the financial sector.

- The world’s largest investment firm Blackrock has stated that we are on the edge of a fundamental reshaping of finance in the light of the climate changes. Furthermore, several index funds have moved from being pure index funds into excluding firms according to environmental, social and corporate governance factors (ESG). There are definitely good reasons for analyzing the interaction between investments, environment and returns, Frederik Lundtofte explains.

Good and bad investments

Investments that affect the climate positively are for example investments into the windmill or solar power industry. These investments will facilitate the financing opportunities of these industries so that they can grow. Investments that are bad for the environment are e.g. investments in firms that own coal plants or coal mines. A higher average temperature of the planet could be an impact of investments in those types of companies.

One preliminary result of the research project is that in some sectors, it matters a lot for the carbon emissions in which companies you invest.

- Therefore, if you are concerned about the climate, it is very important to keep track of the carbon emissions of individual companies within those sectors, says Frederik Lundtofte.

Facts

  • The project started in 2019.
  • Project partners are FORMAS in Sweden, Lund University and 3rd eyes analytics in Switzerland. Frederik Lundtofte and his project partners Juan Carlos Parra-Alvarez (Aalborg University Business School) and Thomas Fischer (Lund University) are also planning to involve Copenhagen Fintech, which has connections to several Danish fintech firms.

Contact

Professor Frederik Lundtofte, Aalborg University Business School, phone: +45 9940 7264, email: fsl@business.aau.dk

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