Externality Investment Research Network
Fills the externality research gap for portfolios
Fills the externality research gap for portfolios
About EIRN
Funding original research
Stimulate, incubate, fund original research on the internalization of externalities of diversified portfolios.
Stimulate, incubate, fund original research on the internalization of externalities of diversified portfolios.
Our Ecosystem
Meet our Leadership
A diverse group of passionate professionals, each bringing unique skills and experiences to drive innovation and excellence in every project we undertake.
A diverse group of passionate professionals, each bringing unique skills and experiences to drive innovation and excellence in every project we undertake.
How we define
Externalities
A side effect of an economic transaction (usually in the normal course of business) that impacts third parties (or party) which are not party to the transaction or contract. An externality does not have a market price, although it may have significant market, economic and/or financial consequences. An externality may be positive or negative. An externality may be pecuniary or non-pecuniary, the former have direct monetary impacts, while the later has impact on social, economic, social and/or environmental conditions. In turn these may have secondary, or indirect monetary costs.
Systemic (financial) Risk
The failure (or near failure) of a financial system (e.g. banking, monetary) or other system (e.g. environmental) rather than one or some of its component parts (e.g. a bank, financial entity; a specific river). The consequence of such collapse is widespread not only to a financial and monetary system or a critical ecological sector but to the society.
Systematic Risk
The impact of a systemic risk (e.g. climate change, financial) that cannot be entirely mitigated and/or hedged in a portfolio. It stands in contrast to idiosyncratic risks that may impact a firm, sector or industry but not the whole portfolio.
Universal Owners / Whole Portfolio Effect
The terms are typically used interchangeably. This is a core idea for EIRN. Externalities (negative, positive, pecuniary, non-pecuniary) are to a degree (empirically determined) internalized in a diversified portfolio but are not accounted for as they have ‘no’ apparent market value. But by definition they have a variety of effects. As a diversified portfolio is a reflection of the whole economy (again, to a degree empirically determined), and as such its performance (especially long term) is determined by the performance of the economy. In the case of negative externalities this is by definition suboptimal. If defined and measured such externalities impact the risk profile of the portfolio, currently not accounted for.
Stewardship
While definitions vary, stewardship of investments focus on enhancing long-term value emphasizing alignment with the interests of investors, clients, beneficiaries, and of society. Various means are used to promote stewardship, e.g. voting rights, engagement, proxy filings and monitoring.
Externalities
A side effect of an economic transaction (usually in the normal course of business) that impacts third parties (or party) which are not party to the transaction or contract. An externality does not have a market price, although it may have significant market, economic and/or financial consequences. An externality may be positive or negative. An externality may be pecuniary or non-pecuniary, the former have direct monetary impacts, while the later has impact on social, economic, social and/or environmental conditions. In turn these may have secondary, or indirect monetary costs.
Systemic (financial) Risk
The failure (or near failure) of a financial system (e.g. banking, monetary) or other system (e.g. environmental) rather than one or some of its component parts (e.g. a bank, financial entity; a specific river). The consequence of such collapse is widespread not only to a financial and monetary system or a critical ecological sector but to the society.
Systematic Risk
The impact of a systemic risk (e.g. climate change, financial) that cannot be entirely mitigated and/or hedged in a portfolio. It stands in contrast to idiosyncratic risks that may impact a firm, sector or industry but not the whole portfolio.
Universal Owners / Whole Portfolio Effect
The terms are typically used interchangeably. This is a core idea for EIRN. Externalities (negative, positive, pecuniary, non-pecuniary) are to a degree (empirically determined) internalized in a diversified portfolio but are not accounted for as they have ‘no’ apparent market value. But by definition they have a variety of effects. As a diversified portfolio is a reflection of the whole economy (again, to a degree empirically determined), and as such its performance (especially long term) is determined by the performance of the economy. In the case of negative externalities this is by definition suboptimal. If defined and measured such externalities impact the risk profile of the portfolio, currently not accounted for.
Stewardship
While definitions vary, stewardship of investments focus on enhancing long-term value emphasizing alignment with the interests of investors, clients, beneficiaries, and of society. Various means are used to promote stewardship, e.g. voting rights, engagement, proxy filings and monitoring.
Externalities
A side effect of an economic transaction (usually in the normal course of business) that impacts third parties (or party) which are not party to the transaction or contract. An externality does not have a market price, although it may have significant market, economic and/or financial consequences. An externality may be positive or negative. An externality may be pecuniary or non-pecuniary, the former have direct monetary impacts, while the later has impact on social, economic, social and/or environmental conditions. In turn these may have secondary, or indirect monetary costs.
Systemic (financial) Risk
The failure (or near failure) of a financial system (e.g. banking, monetary) or other system (e.g. environmental) rather than one or some of its component parts (e.g. a bank, financial entity; a specific river). The consequence of such collapse is widespread not only to a financial and monetary system or a critical ecological sector but to the society.
Systematic Risk
The impact of a systemic risk (e.g. climate change, financial) that cannot be entirely mitigated and/or hedged in a portfolio. It stands in contrast to idiosyncratic risks that may impact a firm, sector or industry but not the whole portfolio.
Universal Owners / Whole Portfolio Effect
The terms are typically used interchangeably. This is a core idea for EIRN. Externalities (negative, positive, pecuniary, non-pecuniary) are to a degree (empirically determined) internalized in a diversified portfolio but are not accounted for as they have ‘no’ apparent market value. But by definition they have a variety of effects. As a diversified portfolio is a reflection of the whole economy (again, to a degree empirically determined), and as such its performance (especially long term) is determined by the performance of the economy. In the case of negative externalities this is by definition suboptimal. If defined and measured such externalities impact the risk profile of the portfolio, currently not accounted for.
Stewardship
While definitions vary, stewardship of investments focus on enhancing long-term value emphasizing alignment with the interests of investors, clients, beneficiaries, and of society. Various means are used to promote stewardship, e.g. voting rights, engagement, proxy filings and monitoring.