A research paper on fossil-fuel divestment and another on how passive investors have influence on corporate governance have won an annual investor research competition held by the Investor Responsibility Research Center, said a news release from non-profit research organization.
Each winner gets a $10,000 award.
The winning practitioner research paper by five researchers from MSCI published in April — “Beyond Divestment: Using Low Carbon Indexes” — summarizes three MSCI indexes that are “designed to reflect divestment and reweighting strategies to reduce carbon exposure” as a result of shortcomings of the divestment approach, according to the paper.
A divestment strategy, according to the paper, “can create significant short-term risk by potentially deviating sharply from market returns.” The paper describes the research behind MSCI's low-carbon indexes, the MSCI Global ex-Fossil Fuels, the MSCI Global Low Carbon Target indexes and the MSCI Global Low Carbon Leaders index.
The winning academic research paper — “Passive Investors: Not Passive Owners” — examines whether passive institutional investors, as an “increasing important component of U.S. stock ownership,” have a large influence on firm-level governance and concludes that passive investors have a large influence “through their large voting blocs.”
That paper is written by Ian R. Appel, assistant professor of finance at the Carroll School of Management at Boston College; Todd A. Gormley, assistant professor of finance at The Wharton School of the University of Pennsylvania; and Donald B. Keim, professor of finance and director of the Rodney L. White Center for Financial Research at The Wharton School.