Urban Water Partners (A) (CW)

Karthik  Ramanna; George  Serafeim

Supplement | HBS Case Collection | August 2010 (Revised December 2010)

Urban Water Partners (A) (CW)

Abstract

The case explores a new venture to bring clean water to Tanzanians who otherwise cannot access or afford it. Management has enough money to get their company through August 2010, but needs more capital. An HBS alum is interested in investing in the company; consequently management needs to revisit their early assumptions, decide on the incentive structure for water vendors in Tanzania, and put together a pro-forma income statement, cashflow statement, and balance sheet in anticipation of their meeting with the potential investor.

Keywords: Human Needs; Accrual Accounting; Financial Statements; Health Industry; Utilities Industry; Dar es Salaam;

Format: Multimedia

1 pages

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Citation:

Ramanna, Karthik, and George Serafeim. "Urban Water Partners (A) (CW)." Harvard Business School Spreadsheet Supplement 111-701, August 2010. (Revised December 2010.)

Article | Financial Analysts Journal | 2020

Public Sentiment and the Price of Corporate Sustainability

George Serafeim

Combining corporate sustainability performance scores based on environmental, social, and governance (ESG) data with big data measuring public sentiment about a company’s sustainability performance, I find that the valuation premium paid for companies with strong sustainability performance has increased over time and that the premium is increasing as a function of positive public sentiment momentum. An ESG factor going long on firms with superior or increasing sustainability performance and negative sentiment momentum and short on firms with inferior or decreasing sustainability performance and positive sentiment momentum delivers significant positive alpha. This low sentiment ESG factor is uncorrelated with other factors, such as value, momentum, size, profitability, and investment. In contrast, the high sentiment ESG factor delivers insignificant alpha and is strongly negatively correlated with the value factor. The evidence suggests that public sentiment influences investor views about the value of corporate sustainability activities and thereby both the price paid for corporate sustainability and the investment returns of portfolios that consider ESG data.

Keywords: sustainability; ESG; ESG (environmental, social, governance) performance; investment management; investment strategy; big data; Machine learning; environment; Environmental Sustainability; Corporate Governance; Performance; Asset Pricing; Investment; Management; Strategy; Human Capital; Public Opinion; Value;

Citation:

Serafeim, George. "Public Sentiment and the Price of Corporate Sustainability." Financial Analysts Journal 76, no. 2 (2020): 26–46. View Details

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Unchecked climate change presents a profound threat to economic growth and political stability but despite widespread public concern about the issue, global emissions of greenhouse gases (GHGs) have not declined. Indeed current “business as usual” predictions imply that average global temperatures will rise by more than 4⁰C by 2100, with potentially catastrophic results. In this paper, we argue that while putting in place an effective regime for pricing GHG emissions is more essential than ever, it is unlikely to be sufficient. It is in this context that we hypothesize that increasing the fraction of commercial firms who are “authentically purpose-driven” might have a very significant effect on the problem of climate change.

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Urban Water Partners (A) (CW)

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