天美传媒

Professor Robert Kosowski tells us how financial economics can be used in the fight against climate change and to bring about the fair distribution of resources

After public trust in the financial services sector was destroyed by the , Robert Kosowski, Head of the Department of Finance and Professor of Finance at Imperial Business School, was among those who advised the UK Parliament鈥檚 House of Lords on a measure designed to protect consumers and prevent another, similar, catastrophe. 聽

The measure, which came into effect in 2013, was known as the (AIFMD) and was considered the European equivalent to the in the United States. Professor Kosowski鈥檚 interest in the directive, he says, came from his commitment to evidence-based government regulation.聽

鈥淚t鈥檚 very satisfying whenever regulation follows the evidence or evidence-based processes because it isn鈥檛 always the case,鈥� he says.聽

During his inaugural lecture at the Business School, Professor Kosowski discussed the role of luck and skill in alternative investment management, stressing the level of sophistication necessary to spot unpredictable events that can have severe consequences (鈥渂lack swans鈥�), such as the 2008 financial crisis. Arguing that it is possible to anticipate these events with hypothetical scenario analysis and stress tests, he went on to say this requires scenario design and careful attention to implementation.聽

He believes the next 鈥渂lack swan鈥� will be climate change related and says advising on the AIFMD has helped him in his work on 聽criteria and climate-based regulation, exposing him to the way regulation can evolve, as well as the impact it can have on the market and on business. 聽

Using financial economics for good

As Head of the Department of Finance, a role he took over in 2021, he oversees several of the Business School鈥檚 research centres, including the Centre for Climate Finance & Investment. And a key focal point for the Centre, he says, is verification: ensuring the different kinds of ESG ratings 鈥� bond, stock or company ratings 鈥� are verified and 鈥渞eflect the reality of whether a company is green or not鈥�.聽

One of his own areas of interest is the incorporation of ESG preferences into so-called low volatility, low risk portfolios, looking at all the processes that need to be in place to achieve more sustainable growth.

鈥淭his is a recent research stream that I care dearly about and can make the world a better place,鈥� he says.聽

But despite the challenge of incorporating green policies into financial systems and government regulation, Professor Kosowski is optimistic about the future. 鈥淲e need to be realistic about what we can achieve but I don鈥檛 think making business and the economy more efficient is incompatible with the sustainability agenda. However, it鈥檚 important to remember that there鈥檚 still a long road ahead.鈥澛�

It's fascinating to work on groundbreaking science and knowledge, and then try to package that and communicate it to 天美传媒

His other research interests, such as machine learning, hedge funds and economic forecasting are linked by his desire to demonstrate how resources can be 鈥渙ptimally and fairly鈥� distributed across the economy.聽

鈥淔or efficient allocation of capital, you need to understand where the biggest opportunities are, but also the associated risks, because measuring them incorrectly can lead to misallocation, which is bad for efficiency, bad for economic growth and bad for welfare,鈥� he says.聽

The value in research impact聽

In addition to his roles at the Business School, Professor Kosowski is a research fellow at the Centre for Economic Policy Research and an associate member of the Oxford-Man Institute of Quantitative Finance at Oxford University.聽

The focus on research in these roles, he notes, makes them 鈥渉ighly synergistic鈥�, and as a member of the Oxford-Man Institute he has access to researchers, not just from another university, but also from other disciplines. This, he says, had led to him being able to expand his knowledge, particularly in the areas of machine learning, AI and data science.聽

When it comes to research, Professor Kosowski believes impact is crucial. It is, he notes, of increasing importance and one of the benefits of his early-career private sector roles at Goldman Sachs, the Boston Consulting Group and Deutsche Bank is that he has been exposed to questions that are relevant to those outside of academia and have the potential to lead to positive change in the world.聽

鈥淕rant-giving bodies and governments are increasingly concerned with impact, so research must create change as opposed to, for example, simply have a large number of citations.鈥澛�

I don鈥檛 think making business and the economy more efficient is incompatible with the sustainability agenda

Of course, impact can also come about through teaching the next generation of business leaders and Professor Kosowski is determined that Business School 天美传媒 should continue to learn about 鈥渧ery important topics鈥�, including those related to sustainable finance, as well as data science and blockchain application.聽

This is another area where he says his work in the private sector has paid off, helping to influence his teaching in a positive way and make it 鈥渞elevant and practical鈥�.聽

鈥淚t's fascinating to work on groundbreaking science and knowledge, and then try to package that and communicate it to 天美传媒 or executive education clients. 聽

鈥淚t鈥檚 crucial that the Business School stays at the cutting edge of both research and teaching.鈥� 聽

Find out more about Professor Robert Kosowski's work