japanja
‘Quantification of sustainability can be pushed even further’

‘Quantification of sustainability can be pushed even further’

18-08-2022 | インタビュー
There is a large amount of untapped alternative data that can be used for sustainable investments. We discuss this and other topics with our guest Markus Leippold, Professor of Financial Engineering at the University of Zurich and Swiss Finance Institute.
  • Lusanele Magwa
    Lusanele
    Magwa
    Investment Writer

Speed read

  • There is great value in combining climate finance with NLP
  • Measures used to address the climate crisis need to be replicable
  • Self-regulation is not enough to prevent greenwashing 

What prompted you as a student to pursue a research career in finance?

“After graduating with my bachelor's degree, I was not sure in which direction I wanted to go. At the time, I was required to undertake an internship by the university before starting my master's degree. This was a prerequisite for students who did not specialize in business administration in grammar school – I had specialized in humanities with Latin.”

“While interning for an insurance company in Spain in 1991, I found myself with lots of time on my hands. I also happened to have in my possession the first edition of John Hull’s book on option pricing1 and another one on capital market theory from a different author. As I read through the pages, I was immediately fascinated by derivatives and financial markets. So when I returned for my master’s studies, I knew I wanted to specialize in finance and economics, with a preference for quantitative aspects of the theory.”    

“Since I had read the relevant books during my internship in Spain, the courses I enrolled in at the university were a repetition of the material I had covered. So I sneaked into specialized math courses at ETH Zurich, one about stochastic processes and the other about the history and philosophy of mathematics.”

“To help finance my studies, I also worked for an innovative private bank that was developing structured products in 1993. I was part of a small team consisting of three students. And we were given lots of flexibility to implement our ideas in a market that was just emerging. These turned out to be great experiences as they gave me a deep theoretical understanding and insight into the practical relevance – or irrelevance – of the theory.”

クオンツに関する最新の「インサイト」を読む
クオンツに関する最新の「インサイト」を読む
配信登録

Since then you’ve specialized further, combining financial research and sustainability. How did you embark on this journey?

“After completing my doctoral studies in finance, I worked full-time in the financial industry for almost four years. That said, I still enjoyed doing research in my spare time. So after some time, I finally I gave in to my passion and decided to pursue an academic career. I became a professor in 2002 and garnered  years of experience in researching and teaching quantitative finance at institutions such as the Federal Reserve Bank of New York, Imperial College and University of Zurich.”

“But after becoming a family man in 2016, I felt compelled to direct my energy and focus toward something that could help my children's future, and perhaps society more generally. At least, when they grow up, I can tell them that I tried to use my knowledge and skills for something good. That was the tipping point for me to focus on climate finance. At the same time, my interest in machine learning and natural language processing (NLP) began to develop due to my curiosity for new (and quantitative) technologies. Plus, I found great value in combining climate finance with NLP.”

This is a rapidly expanding field of study. What’s on your research agenda right now?

“I am enthusiastic about climate finance-related topics, ranging from asset pricing to climate risk management, disclosure and financial economics. Combining these with artificial intelligence (AI) also intrigues me, particularly NLP. Significant strides have been made in terms of NLP through the use of neural networks and machine learning techniques. I personally got a glimpse of what is feasible with NLP during my first visit to Google in 2019. After a few years, I am now back at Google as a visiting researcher to further deepen my understanding.”

What’s your view on how alternative data and techniques can contribute to sustainability?

“There is a large amount of untapped alternative data that can be used for sustainable investments and sustainable financial products. This data is available in modular form, i.e., figures, graphs, images, tables and text. However, the abundance of data also creates problems. Therefore, we need the right tools to retrieve relevant information, perform the correct analysis and communicate the results. This is the only way to achieve the transparency we need.”

“In addition, the raw data and methods used should be disclosed and open source. Hence, for good scientific practice, we need replicability of the measures we use to address the climate crisis, and not rely on third-party metrics where we cannot determine what they measure and how they do so.”

Talking about transparency in sustainability, how can greenwashing be avoided?

Greenwashing is a ubiquitous term these days. I understand greenwashing as being a special case of targeted misinformation to consumers, investors and the public. Industry associations go to great lengths to set their own standards and disclosure rules. They promote these initiatives as part of high-profile campaigns to create a more positive brand or industry image among the public.”

“These efforts are certainly laudable. But while I believe in the principle of the free market, certainly in those areas where it works effectively, self-regulation is not enough to prevent greenwashing. Therefore, government regulation is necessary to get greenwashing under control. Unfortunately, as the European Union’s green-labeling of gas proves, this opens a Pandora's box of political processes and lobbying.”

“Therefore, another important prerequisite is to promote the maturity of consumers and investors. In a recent study,2 we found that knowledge about sustainable finance is limited even in Switzerland. So if we educate the public, then the transition to a more sustainable economy will be less subject to compromise caused by the slowness of political change.”

What’s the future of quantitative and sustainable investing?

“If you had asked me this question five years ago, and compared my answer with today's reality, you would have probably felt that academics simply have no idea in which direction the world is developing. Who would have thought back then that entirely new questions would arise in sustainable finance thanks to quantitative methods? With the help of AI, this quantification of sustainability can be pushed even further.”

“In particular, I believe we will make great progress in combining numerical, satellite and textual data. At the same time, however, there is a growing need for the development of methods that can present this information in a way that is transparent and clearly understandable, even for the layperson. Also, for good scientific practice, data and methods should be open source and easily accessible for everyone.”


1 Hull, J. C., 1988, ” Options, Futures, and Other Derivatives”, Pearson.
2 Filippini, M., Leippold, M., and Wekhof, T., 2022, “Sustainable finance literacy and the determinants of sustainable investing”, SSRN working paper.

重要事項

当資料は情報提供を目的として、Robeco Institutional Asset Management B.V.が作成した英文資料、もしくはその英文資料をロベコ・ジャパン株式会社が翻訳したものです。資料中の個別の金融商品の売買の勧誘や推奨等を目的とするものではありません。記載された情報は十分信頼できるものであると考えておりますが、その正確性、完全性を保証するものではありません。意見や見通しはあくまで作成日における弊社の判断に基づくものであり、今後予告なしに変更されることがあります。運用状況、市場動向、意見等は、過去の一時点あるいは過去の一定期間についてのものであり、過去の実績は将来の運用成果を保証または示唆するものではありません。また、記載された投資方針・戦略等は全ての投資家の皆様に適合するとは限りません。当資料は法律、税務、会計面での助言の提供を意図するものではありません。

ご契約に際しては、必要に応じ専門家にご相談の上、最終的なご判断はお客様ご自身でなさるようお願い致します。

運用を行う資産の評価額は、組入有価証券等の価格、金融市場の相場や金利等の変動、及び組入有価証券の発行体の財務状況による信用力等の影響を受けて変動します。また、外貨建資産に投資する場合は為替変動の影響も受けます。運用によって生じた損益は、全て投資家の皆様に帰属します。したがって投資元本や一定の運用成果が保証されているものではなく、投資元本を上回る損失を被ることがあります。弊社が行う金融商品取引業に係る手数料または報酬は、締結される契約の種類や契約資産額により異なるため、当資料において記載せず別途ご提示させて頂く場合があります。具体的な手数料または報酬の金額・計算方法につきましては弊社担当者へお問合せください。

当資料及び記載されている情報、商品に関する権利は弊社に帰属します。したがって、弊社の書面による同意なくしてその全部もしくは一部を複製またはその他の方法で配布することはご遠慮ください。

商号等: ロベコ・ジャパン株式会社  金融商品取引業者 関東財務局長(金商)第2780号

加入協会: 一般社団法人 日本投資顧問業協会