Commenting on the announcement, Dirk Schoenmaker Professor of Banking and Finance said: “As a knowledge partner and advisor to financial organisations, Deloitte knows how to translate scientific research into the daily practices of a financial institution. This is important for the success of our platform because we want to help embed sustainable change in existing processes. Deloitte is familiar with these processes across the financial sector and has a wealth of experience in redesigning them for different purposes.”
Purpose-led financial services
“We believe that a purpose-led financial services is common sense,” adds Hesse McKechnie, director of Sustainable Finance at Deloitte. “EPSVC connects the most important parties in the sector, leading to a significant impact. That is why we joined. Academia has an interesting, forward-looking perspective that we need to learn from. It’s time we put that knowledge into practice.”
EPSVC brings professionals in the financial industry and NGOs together with academic faculty researchers, PhD, Master and Bachelor students, MBAs and participants in RSM’s Executive Education programmes. “One of the biggest challenges for the financial sector is to take a more integrated and long-term approach than the current focus on short-term results for shareholders,” says Schoenmaker. “We want to develop new methods to incorporate sustainability into asset pricing and valuation, and to make the transition towards long-term value creation.”
Integrated value in the FSI
Deloitte is a member of EPSVC’s working group on integrated value, which aims to develop concrete guidelines for the integrated valuation of investment projects and companies. Integrated value is the value of a product, business case or company, including all its positive and negative externalities. McKechnie says: “Financial institutions have been working on attributing financial value to climate risk for some time, but impact measurement for other environmental, social and governance (ESG) factors such as biodiversity or social capital is still very nascent. This working group is looking at how to create a methodology to help determine integrated value based on research and case studies.”
To do that, the working group uses the insights of students from the Honours class of the MSc Finance and Investments programme, in which Deloitte participates. For example, students recently researched how banks can judge the credit applications of farmers aspiring to transition from conventional to organic farming by looking into the environmental costs and benefits of that transition. The students used nine real-life cases to calculate their integrated value with the True Price™ methodology, guided by the Impact Institute.
Finance decisions driving positive change
This year’s Finance and Investments Honours students will conduct a similar study in the automotive sector, looking at the transition from combustion-engined vehicles to electric vehicles. Financial institutions are interested to better understand how loans and investments are affected by the risk of ‘stranded assets’ – assets that have become liabilities, such as fossil fuels. The Honours project enables students to learn how informed lending and investment decisions can drive positive change, accelerating the transition to a more inclusive economy and increased financing that supports the UN’s 17 Sustainable Development Goals (SDGs).
Academia involved in contemporary problems
The collaboration of EPSVC with financial institutions such as Deloitte fits perfectly with the ambitions of RSM, which recently installed Prof. Daan Stam as Dean of Engagement and Partnerships to intensify collaboration with external parties. “Centres like the Erasmus Platform for Sustainable Value Creation are important vehicles for realising our strategic ambitions and are invaluable mechanisms for research innovation, knowledge dissemination and positive impact,” says Stam. “They fulfil several roles that may not be easily achievable through existing academic educational and research structures. And because RSM research centres engage with corporate partners such as Deloitte, they can involve academia in contemporary problems and needs, create collaborative opportunities between the real economy and academia, engage with society, foster impactful research and create real-time usable knowledge.”