School of Business and Management Department of Finance 202 Climate Policies and Cost of Financing Supervisor: GOYAL Vidhan Krishan / FINA Student: RACHMAT Farah Darlene / FINA Course: UROP1100, Summer Previous research papers have shown that a single firm can have varying ESG ratings from different ESG rating agencies. The resulting information discrepancies have caused the overvaluation of the firms’ stocks, resulting in lower portfolio returns. Besides suboptimal returns, these ESG Indices are also utilized by various fund managers in managing trillions of assets under management. In this report, I analyse the types of Green ETFs that maximize investors’ returns. Furthermore, I also analyse the investment strategy of these Green ETFs alongside its constituents. With these findings, I aim to develop an investing strategy that minimizes the effects of information asymmetry due to disagreements from various ESG ratings. Climate Policies and Cost of Financing Supervisor: GOYAL Vidhan Krishan / FINA Student: XU Tunan / GBM Course: UROP1100, Summer In recent years, ESG disclosure has become the focus in the financial world. Many states legislate to make ESG disclosure mandatory, while it is still a debatable question for governments worldwide to discuss. This paper will examine whether ESG disclosures reduce credit spreads. Credit spread reflects the issuer risk in credit markets, partly reflecting the information asymmetries between firms and bond investors. Higher ESG disclosures can alleviate the information asymmetry and allow investors to understand better legal and regulatory risks arising from ESG. A negative correlation between ESG disclosure score and credit spread is expected for companies when controlling for pollution level, leverage, firm size, and other factors. Climate Policies and Cost of Financing Supervisor: GOYAL Vidhan Krishan / FINA Student: XU Yan / QFIN Course: UROP1100, Summer Among a variety of emerging green financial instruments over the years, green ABS is an innovative vehicle driving the growth of the green bond market. In this paper, I analyze the green ABS market in Mainland China. The report defines and classifies green ABS products. It further provides certification and disclosure requirements. In addition, the report highlights the comparative advantages of green ABS issuances. It then observes trends of green ABS issuances in the Mainland and identifies policies and regulations boosting the green ABS business. Furthermore, it includes a case analysis of Industrial Bank Co., Ltd, focusing on the first labelled green credit ABS issued in Mainland.
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