VP Bank presents the Best Paper Award for Sustainable Finance
On 21 September 2023, the Department Finance & Economics of Liechtenstein Business School held a workshop on the topic of "Sustainable Finance", during which international researchers were able to submit their papers on the subject of sustainable finance. Together with representatives of VP Bank, the findings of the best eight submitted papers were presented and discussed.
For the sixth time, the best paper was awarded the "VP Bank Best Paper Award" and a prize money of CHF 2,000. The winning paper was written by Tobi Oladiran, Roman Kräussl and Denitsa Stefanova, researchers at the University of Luxembourg and the Hoover Institution at Stanford University think tank, and is called "ESG as Protection Against Downside Risk".
The authors investigated the connection between a company's sustainability rating and the costs of hedging against a slump in the company's share price. They were able to prove that not only the overall assessment (ESG rating), but also the divergence of the three components environment, social and corporate governance influence the hedging costs. The shares of a company that takes all three dimensions equally seriously and consequently performs similarly well have lower hedging costs.
VP Bank is convinced that taking sustainability into account offers added value for investors. "The usefulness of ESG ratings as a risk indicator brings the topic of sustainability closer to a broad investor base. The work proves that sustainability risks have a direct influence on hedging costs and are thus relevant for all investors. In this way, the researchers provide further, important scientific evidence for practical use," says Bernd Hartmann, Head of CIO Office and Chief Strategist at VP Bank. The VP Bank team congratulates the authors on this award.