Join us online for our next New Energy Series talk, "Sustainable Investing Strategies with Real Asset Trades," with Felipe Verastegui-Grunewald, PhD Candidate, Columbia University.

In this talk, we address this question through a competitive equilibrium model. We show that the strategy choice critically determines the distribution of reallocation risk across the pool of productive assets. Our model predicts that complying with sustainable targets can affect downstream consumption markets, creating strategic complementarity or substitution in compliance decisions, depending on the mass of environmentally concerned investors. Financing frictions, then, lead to leakage trades: assets shift from compliant to non-compliant firms, with negative implications for clean technology adoption and welfare. Limiting only to conventional sustainable investment strategies - such as green screening - is suboptimal under worst-case scenarios of ex-post firm-investor matches in the presence of leakage buyers. Unconventional strategies, like reduction or investment screening, can effectively mitigate the reallocation of industrial pollution and induce a larger degree of clean technology adoption.

Register for this online talk.