The Master of Science in Mathematical Finance & Financial Technology (MSMFT) program at Boston University Questrom School of Business marked a progressive return to normalcy by holding its first in-person industry event since 2019 and the beginning of the COVID pandemic.
The program hosted a conversation with leading experts on the topic of “ESG” investing and a graduating students poster session showcasing their summer projects. The topic aligns closely with Questrom’s continual exploration of the social impact of business education. ESG, which stands for Environmental, Social, and Governance, represents a set of criteria for investment choices that extend beyond expected financial return and take into consideration a company’s impact on the environment or society – or how ethically the company is led and operated. Noticeably, the conversation came on the tail of Boston University’s recent decision to fully divest from fossil fuels. Guests included members of the financial industry and graduating students.
The evening started with a keynote presentation by Dan diBartolomeo, founder of Northfield Information Services and current executive editor of the Journal of Asset Management. Mr diBartolomeo presented an overview of the ESG investing landscape, which seeks to better account for what he terms the “four horsemen of financial apocalypse” of market distorting events: War, Pandemic, Corruption, and Climate Change. ESG investing, he argued, can minimize investor risk to these catastrophic externalities in addition to making the world a better place.
Following this presentation, a discussion panel was moderated by Eric Jacquier, Questrom MSMFT program Executive Director and Clinical Professor of Finance. He led the conversation with the three panelists: diBartolomeo, Dr. Gita Rao, ESG portfolio manager, and Sloan faculty and director of the MIT Sloan Impact Investing Initiative, and Dr. Todd Arthur Bridges, Global Head of Sustainable Investing for Arabesque.
Among the insights shared, Bridges pointed out the difficulties in accurately measuring the environmental and social impact of companies but said that certain corporate governance criteria are more easily quantifiable. Rao summarized findings from a collection of studies that have established corporate boards with greater female representation outperform their male-dominated counterparts, due in part to women directors better assessing risks. DiBartolomeo warned that assessing risk in ESG investing can be extremely difficult, citing a series of legal settlements by tobacco companies in the 1990s which failed to weaken the industry as observers had predicted. Jacquier noted that the very confusing and hard to pinpoint issues in measuring how firms address ESG criterion makes it a fertile field for new quantitative analytics techniques such as Machine Learning and Artificial Intelligence.
The evening concluded with the annual MSMFT summer experience showcase and reception. The panel and industry guests were able to visit a dozen posters of soon to graduate students summarizing their summer internship and project work.