The FDIR Chair was established in 2007. Its mission is to foster new valuation models that account for the long-term environmental and social consequences of corporate behavior. The chair is co-directed by Sébastien Pouget and Catherine Casamatta from TSE, and Guillaume Hollard from École Polytechnique. It leverages the expertise of a team of highly qualified, internationally renowned researchers.

Under the aegis of the French Asset Management Association, a dozen asset management firms, institutional investors, and consulting firms have committed to supporting research in the field of responsible investment and sustainable finance.

Context:

Faced with growing demand for responsibly invested savings, French management firms began launching their first such products several years ago. The rapid growth in assets under management for responsible investment (RI) necessitates a critical look at how these investments are managed, selected, validated, and evaluated. Does a company’s social responsibility generate additional value that portfolio managers should incorporate into their assessments? The chair’s development requires exploring new methods for evaluating financial assets to account for sustainable development issues.

Modern financial theory has yet to provide tools to address this issue. Responsible investment, linked to the concept of sustainable development, offers an interesting alternative. Since citizens are also investors, they can express their commitments through their investments.

Few academic studies have been devoted to this approach so far; however, it appears both significant for economic stakeholders and compelling for economic researchers.

Objectives:

• Contribute to the development and dissemination of theories and practices in the field of responsible investment through both research and training programs;
• Facilitate direct contact between academic partners and initiative members for their mutual benefit;
• Enhance and consolidate the excellence of academic partners and members by organizing international-level reflection, training, and research activities centered on a theme of general interest.

To achieve these objectives, the FDIR Chair conducts research across three main themes.

Evaluating long-term ESG performance and risks

Numerous environmental, social, and governance (ESG) factors are significant in the long term. This research theme aims to study how to evaluate the opportunities and risks of investment projects from an ESG perspective. In this context, researchers are exploring, for example, the link between Socially Responsible Investment and sovereign bonds. They are also studying how to model social and catastrophic risks (related to climate change, nuclear disasters, etc.) and how to value them (interest rates, risk premiums, etc.).

Corporate governance

This research theme aims to study the impact of various governance issues—such as director independence and expertise, governance mechanisms, executive compensation, and shareholder horizons—on the economic, financial, and extra-financial performance of companies. The goal is to build a coherent conceptual framework while producing empirical studies on both French and international financial markets.

Shareholder engagement

Shareholder engagement aims to influence corporate behavior. This engagement can take the form of closer dialogue between shareholders and management, increased shareholder participation on boards of directors, or the submission of resolutions and voting policies at shareholder meetings.

Research conducted under this initiative addresses various questions related to engagement. How do SRI investors develop their engagement and dialogue policies? What financial performance can be expected from extra-financial issues? What is the link between shareholder engagement and "best-in-class" investment strategies?

A more detailed description of the chair's research themes is available here.

‍