1

Socially Responsible Investment Socially Responsible Investment and Environmental Fundingand Environmental Funding

Christian GOLLIERIDEI Researcher

Professor of EconomicsUniversity Toulouse I

Paris is key in the development of SRI funds. There is no agreed-upon methodology to evaluate assets according to their

social and environmental performances. There is not much evidence of the structure of the demand for SRI, or of the

ethical, social and environmental preferences of investors. There is no clear evidence and no theory of the effects of the emergence of

the social responsability of investors on asset prices, on the cost of capital of firms, and on their real investment decisions.

Based on this situation, 15 french players on SRI took the initiative to create a new chair on "Durable Finance and Responsible Investment".

It is a joint venture of the Ecole Polytechnique and the University of Toulouse (ranked 6th best department of economics in the world).

A new chair on SRIA new chair on SRI

A first set of questionsA first set of questions

The economics of SRI is connected to many fields: environmental economics, psycho-economics, behavioural finance, law and economics, growth theory, public economics, decision theory under uncertainty,...

A subset of crucial questions are going to be examined over the next 3 years:

Evaluation of the investors' willingness to pay for a cleaner world, and its impact on the optimal asset allocation of SRI funds;

Economic analysis of the so-called "entrepreneurial short-termism". Aggregation of investors' SR preferences and beliefs, and elaboration of a "SR

CAPM". Could classical investors undo (and take advantage of) the actions of socially responsible investors?

How SR firms can signal their quality under asymmetric information? Cost of observability. Role of financial intermediaries and of rating agencies. Impact on governance.

How much should we do for future generations? What should we do with the precautionary principle?

4

Stockholm, Thursday, March 29, 2007Stockholm, Thursday, March 29, 2007

Paris, GatewayParis, Gatewayto Euro Capital Marketsto Euro Capital Markets