Cino Robin Castelli - Quantitative Methods for ESG Finance

1. Chapter 1
2. Chapter 2
3. Chapter 4
4. Chapter 5
5. Chapter 7
6. Chapter 8

1. Chapter 1
2. Chapter 3
3. Chapter 4
4. Chapter 5
5. Chapter 6
6. Chapter 7
7. Chapter 8

It is a great book for people trying to learn quickly about the state of the art of ESG modelling, evaluation, regulations, forecasting, and other relevant issues. It covers difficult topics in a simple, clear format. I strongly recommend this book for researchers interested in ESG as well as a textbook in a course covering ESG topics from a financial perspective.

Stan Uryasev, Professor and Frey Family Endowed Chair, Stony Brook University

Indexes are more and more crucial in finance and asset management and properly understanding their constituents is the base for any effective benchmarking. The authors show how to compute ESG indexes and present the related theory in a very clear and useful manner for sophisticated as well more nave investors. Starting with traditional indexes (equal-weighted, market cap-weighted, etc.) to most recent computation approaches (smart beta, optimization driven indexes, etc.) wide-ranging explanations are given both from a theoretical point of view to as well as how to structure them: not an easy task, but successfully performed.

Carlo Maria Pinardi, Professor, International Corporate Finance, Bocconi University of Milan

CYRIL SHMATOV

CINO ROBIN CASTELLI

Copyright 2023 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4470, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permission.

Trademarks: Wiley and the Wiley logo are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the United States and other countries and may not be used without written permission. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc. is not associated with any product or vendor mentioned in this book.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic formats. For more information about Wiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data is Available:

ISBN 9781119903802 (Hardback)

ISBN 9781119903826 (ePDF)

ISBN 9781119903819 (ePub)

Cover Design: Wiley
Cover Images: d.ee_angelo/Shutterstock; Jackyenjoyphotography/Getty Images
Author photo credit: Cyril Shmatov - Courtesy of author; Robin Castelli - Rob Tannenbaum Photography

I am delighted and honored to introduce Quantitative Methods for ESG Finance, a must-have reference for the student of finance, the investment practitioner, and the banker who wants to understand the intricacies of environmental, social, and governance (ESG) finance.

Cyril Shmatov and C. Robin Castelli bring to the table many years of first hand experience across diverse areas of finance and are currently at the forefront, tackling ESG-related questions the banks face in their management and operations. This extensive practical experience is what allows them to turn a fragmented topic such as ESG into a logical and easy-to-understand book that provides insight to audiences from graduate students to seasoned investors. Cyril and Robin have succeeded in demystifying the topic with well-documented data and sources, as well as practical examples of how to implement and use the relevant techniques in the real world.

ESG has taken the world of finance by storm. Due to the novelty of this field and its obvious differences from the more traditional areas of finance, the study of ESG finance requires an entirely different skillset. Fortunately, this emergence of ESG finance as a major new area of finance coincides with more affordable data storage. Unstructured alternative data are finally becoming widely available to the investor community at large. These developments result in tremendous opportunities for the world of finance at large but also require that we reassess and refresh the techniques we commonly use when dealing with data and financial analysis in general.

There is an obvious need for a defining document, not available on the market until this moment, to be a comprehensive exposition of ESG finance and the quantitative methodologies that are needed in its new environment, a fundamental starting point for anyone wanting to learn about the field, from the theoretical to the practical.

The book you are holding is that document. This work is a significant contribution to the understanding of ESG finance. It is a fundamental starting point for anyone wanting to learn about the field, from the theoretical to the practical. It provides all the necessary building blocks that the reader will need to embark on their journey in this exciting and uncharted field. Finally, it provides both the expert and the beginner with a 360-degree review of what is needed to gain understanding of ESG finance, from the basics of climate risk to the very important and popular topics such as alternative data and factor investing, all the way to up-and-coming methodologies such as agent-based modeling for ESG applications. This book has it all! If you are thinking of ESG finance, either as a field of study or as an area of practice, you should start your journey by reading this book.