Can Barry Callebaut Attract Sustainable Investment with its ‘Forever Chocolate’ Strategy?

Abstract

Barry Callebaut, a Zurich-based chocolate and cocoa manufacturer founded by Klaus Johann Jacobs in 1996, was the world’s leading manufacturer of high-quality chocolate and cocoa products. It was one of the first companies to realize that it had to do something about the poor conditions on cocoa farms. In its ‘Forever Chocolate’ plan for 2025, Callebaut committed to scale up its own as well as the industry initiatives to raise industry standards through its four bold targets in the chocolate supply chain. In 2017, the Swiss chocolate giant entered into an innovative revolving credit facility agreement with a syndicate of 13 banks with ING as the sustainability coordinator. As part of this, interest rate was linked to the company’s year-on-year sustainability performance improvement. Callebaut was confident that it could reach its sustainability goals, working with all the stakeholders in the cocoa supply chain, by translating its sustainability targets into a clear set of key performance indicators, and by monitoring and reporting on the progress on an annual basis. However, it was not easy for the company to drive growth on the sustainability front as it faced difficulties in managing consistency in its sustainable growth over the years. Industry observers were skeptical about Callebaut’s long-term sustainability goals and questioned whether these could help generate fund flow to the company.

This case gives students an opportunity to analyze the potential impact of sustainability investment on the company’s strategy and performance and helps them to discuss the possibilities of further investment with the company to achieve its cocoa sustainability goals. This case is meant for MBA level students as part of their Sustainable Finance and Financial Management curriculum. This case is designed to enable students to: 1) Understand Callebaut’s strategic position as a global leader in cocoa sustainability and how this helped it to attract green loans; 2) Evaluate how the Triple Bottom Line ethos of the company creates value for its stakeholders and examine how the sustainability initiatives of the company help in strengthening its liquidity profile; 3) Study and examine how the sustainability performance by the company attracted innovative revolving credit facility linked to its sustainability performance; 4) Analyze how Callebaut can manage its business growth effectively with the underlying objective of achieving sustainability; and 5) Understand the key concern for Callebaut – how can it impress investors to go in for cocoa financing and achieve the sustainability targets.

AuthorsDebapratim Purkayastha, Trilochan Tripathy & Benudhar Sahu
InstitutionICFAI Business School Hyderabad, India
XLRI, Jamshedpur
Competition Year2018
PlaceFirst Prize
TrackSustainable Finance
Key WordsSustainable investment, Corporate finance, Green loans, Revolving credit facility, Blended finance strategies, Financial instrument linked to green investment criteria; Working capital management
CoursesFinance, Corporate Social Responsibility, Strategic Management
Target AudienceMBAs
Permission rightsThis case will be published at the Case Centre shortly. You find an inspection copy for download below.
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oikos International

posted June 5, 2018

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SAUDI ARAMCO

Abstract

In early 2016, the largest state-owned Oil Company in the world, Saudi Arabia-based Saudi Aramco (Aramco), declared a proposal to float an IPO. The crown prince of Saudi Arabia, Prince Salman, had stunned the world when he declared in early 2016 that Aramco’s worth would be around $2 trillion. Aramco was not only an oil company but a budget to run the nation as 85% of Saudi Arabia’s budget came from the tax which Aramco had to pay.

The intent to monetize the state jewel came at a time when the economy of the Kingdom was under pressure. A widening fiscal deficit and depleting foreign reserves indicated that it was no longer viable to depend on oil exports to run the nation. There was a need to diversify and the impetus to do so would come from the proceeds of the IPO. But the IPO which would decide the fate of 33 million Saudis would come with its own set of challenges.

In 2017, the world had strong reasons to believe that oil prices would remain unstable. During prosperous times, Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia was a member had been able to give stable oil prices to the world but the oil glut had put the harmony of OPEC under stress, especially after the shale revolution, that brought in the US as a formidable player into the global oil game.

The success of Aramco’s IPO would be a function of numerous factors – some in the Kingdom’s control and some beyond. In 2017, concerns about climate change were on the rise. Climate policies threatened to put a 40% discount on Prince Salman’s $2 trillion aspirations. The commitment of global leaders to keep a check on global warming would escalate proliferation of renewables across the world and further build a pessimistic outlook for the future of oil prices. Moreover, entrepreneurs like Elon Musk envisaged the death of the internal combustion engine in the near future.

But above all, the elephant in the room was Aramco’s lack of transparency. Several questions were raised in the academia and investor community: Would Aramco pay heed to the voices of minority investors? Or would the monarchy call the shots at the end of the day? How did one valuate an organization with no comparable peers? How would climate control policies play a role in the success or failure of the Aramco IPO? And most importantly, how would an IPO of an oil giant with access to 15% of the world’s oil reserves, impact the future of world climate?

It remained to be seen how an IPO would shape the nation and how an oil giant would shape the future of world climate.

AuthorsAlok Kavthankar & Indu Perepu
InstitutionICFAI Business School Hyderabad, India
Competition Year2018
PlaceSecond Prize
TrackSustainable Finance
Key WordsOil Industry, Sustainability,Finance
CoursesFinance, Sustainable Finance
Target AudienceMBAs
Permission rightsThis case will be published at the Case Centre shortly. You find an inspection copy for download below.
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oikos International

posted June 5, 2018

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Regulations for a Sustainable Finance Sector

Abstract

This case describes the deliberations of a financial regulation policymaker at the Dutch Central Bank, Johanna Baks. She is asked by the central bank’s Board to recommend regulations that are conducive to the Netherlands curbing climate change, since the Board officially recognizes this as a threat to long-term financial stability. The financial sector claims that a lower capital requirement for catastrophe bonds and climate bonds is the solution.

Johanna researches this option, as well as several other ones. These other potential financial regulations are: mandatory inclusion of environmental, social, and governance (ESG) factors in supervised financial institutions’ internal models, mandatory public disclosure of ESG factors of the organizations’ investments, a financial transaction tax, prohibiting universal banking and/or limiting banks’ sizes, and supervising financials on social aspects like their culture and gender diversity.

Johanna assesses the potential effectiveness of these regulations, both in terms of impact as well as stakeholder acceptance. Her stakeholders are the general public, politicians & government, other countries’ regulators, and the financial sector. In her impact assessment, Johanna pays particular attention on how to balance the public good of avoiding systemic risks in the financial system against the risk that climate change poses to financial stability.

In this case, students will get acquainted with how financial regulation is made and how some of these could contribute to (or threaten) various sustainability aspects within a society. They will learn about some financial regulations that are currently being discussed at supervisory authorities in the world. Students will be challenged to think about the different kind of environmental, social and economic effects that each of these regulations can have separately, as well as in combination with each other. In doing so, students will also get a sense of the fine art of balancing the interests of the different stakeholders.

AuthorsGaya Branderhors
InstitutionHarvard University, Extension School, USA
Competition Year2018
PlaceThird Prize
TrackSustainable Finance
Key WordsSustainable finance, Finance sector, Regulation, Supervisor, Financial regulation, ESG, Catastrophe bonds, Climate bonds
CoursesSustainable finance, Finance, Environmental Economics, Government & International
Target AudiencePhD, Graduate
Permission rightsThis case is part of the oikos free case collection. Download a free online copy below. If you are a faculty member and you are interested in teaching this case, you can request a free teaching note by sending us an email to freecase@oikos-international.org.
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oikos International

posted June 5, 2018

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Lecture: EY and Voluntas on Sustainability and Finance

As part of oikos Green Week 2018, join our exciting lecture in collaboration with Voluntas and EY! Hear about the two different companies take on sustainability and learn about how they provide services to clients to become more sustainable. EY will share their knowledge on CSR reporting and the value it creates and Voluntas will share their knowledge on sustainable investing. Get your free ticket with the link above!

OIKOS GREEN WEEK 2018:
Do you want to learn about sustainability, network with companies and develop skills you can use for your future career? Then join CBS Green Week 2018 on March 13th-15th!

CBS Green Week is back with plenty of interesting lectures, engaging workshops and entertaining social events – all related to sustainability!

Come and learn about what prominent companies like Ørsted, Accenture and Rambøll as well as ambitious start-ups do to address the sustainable challenges the world is facing. Through lectures, workshops, a networking fair, a green tasting and many more events you will be introduced to the challenges concerning sustainability and the many solutions the business world can offer. Some of the companies you will have the chance to meet include Accenture, Rambøll, Ernst & Young, Voluntas, Siemens, Nimb and many more.

Show up, get curious and network with interesting companies in order to gain knowledge about sustainability. And last but not least: get a view of how businesses can lead the way towards a more sustainable future.

The future of business lies in sustainability!

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oikos International

posted March 2, 2018

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The Fall of SunEdison – A Solar Eclipse?

Abstract

In 2016, one of the largest renewable energy companies in the world, US-based SunEdison Inc., filed for bankruptcy when it couldn’t service the debt it had raised to achieve aggressive growth. SunEdison had had an illustrious past; it had grown to become the largest solar installation company in the US and a global  renewable energy giant. By 2016, solar power had attained grid parity in some parts of the world and solar was reaching its peak growth in the developed world. Governments from the developed world, which were boosting solar power through tax rebates and subsidies were rolling back their incentivization schemes and resorting to stricter guidelines for green project funding.. On the other hand, there was tremendous growth potential in the emerging markets where millions still lived in the dark.

By 2016, one of the most contrasting features of the solar industry was that there was little innovation and differentiation and the market was still defining its business model. The industry had gone into consolidation mode and SunEdison preferred to grow inorganically. To tap the opportunity in emerging markets and win projects, SunEdison started offering rock bottom rates.

When SunEdison’s balance sheet got heavier and the company couldn’t raise further debts, it decided to form subsidiaries called Yieldcos. Yieldcos were essentially energy asset holding public listed companies which assured stable dividends (from sale of electricity which the solar assets generated). Yieldcos issued shares to raise capital using which a completed solar asset was bought from its parent (SunEdison). SunEdison used the capital for further growth.

In an industry where technological innovation was rare, financial innovation became the norm. The case describes SunEdison’s fall from grace. It throws light on the economics of the solar business and the need for robust sustainable finance for renewable projects.

AuthorsAlok Kavthankar & Indu Perepu
InstitutionIBS Hyderabad, IFHE University, India
Competition Year2017
PlaceSecond Prize
TrackSustainable Finance
Key WordsCSR, Socially Responsible Investing, Environmental Performance, Social Performance
CoursesSustainable Finance, Strategic Management, Finance, Business Sustainability, Business and Society, or Environmental Entrepreneurship
Target AudienceMBAs, Undergrads
Permission rightsThis case will be published at the Case Centre shortly. You find an inspection copy for download below.
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oikos International

posted June 19, 2017

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A Burrito without integrity: Is this Chipotle for me?

Abstract

This case, developed primarily from secondary sources, describes the founding of Chipotle Mexican Grill (Chipotle, hereafter) in 1993 by Steve Ells and its rapid ascent to popularity as a fast-casual restaurant based on its unique socially responsible Food with Integrity strategy. Under the leadership of founder-CEO Steve Ells and co-CEO Montgomery Moran, Chipotle outperformed the S&P 500 as well as its rivals since its IPO in 2006.  However, in 2015, the multiple food contamination outbreaks reversed its course, plunging its stock price to an all-time low. In spite of the prompt actions taken by Chipotle’s leadership, the company’s stock price did not regain its pre-scandal highs in the stock market. However, on September 6, 2016, news of activist investor, Bill Ackman’s purchase of 9.9% of Chipotle’s stock gave a much-needed boost to Chipotle’s depressed stock. This case gives students the opportunity to step into the shoes of a young individual investor, Michael Jacobs, to assess the potential impact of Ackman’s investment on the company’s strategy and performance and decide whether or not he should divest his Chipotle holdings.

AuthorsVijaya (Narapareddy) Zinnoury
InstitutionsDaniels College of Business
University of Denver, USA
Competition Year2017
PlaceFirst Prize
TrackSustainable Finance
Key WordsCSR, Socially Responsible Investing, Environmental Performance, Social Performance
CoursesSustainable Finance, Strategic Management, Finance, Business Sustainability, Business and Society, or Environmental Entrepreneurship
Target AudienceMBAs, Undergrads
Permission rightsThis case will be published at the Case Centre shortly. You find an inspection copy for download below.
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oikos International

posted June 19, 2017

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Refugee Labor Market Integration – An Impact Investment Case Study

Abstract

The dislocation of millions of people in various conflict zones of the Middle East and Africa is one of the greatest humanitarian catastrophes of our time. Given the complexity of the issue, various ways of solving the associated challenges have been implemented; reaching from emergency camps in conflict zones to innovative integration services in host countries. With overloaded government processes and too little funding, it is of utmost importance to fund and scale up effective integration services. Successful integration depends to a large extent on promoting the required abilities to build a self- sustained life. As such, labor market integration of refugees becomes of crucial importance first and foremost for themselves, yet successful integration also bears major upsides for the broader society.

One example of a successful integration service is SchlaU Schule, located in Munich, Germany. By providing young refugees with an education that is acknowledged on the German labor market, young refugees can integrate faster and build self-sustained lives through the improved facilitation of labor market integration. Today, organizations like SchlaU Schule often lack funding to operationalize and scale up their services. Hence, identifying successful services that generate social impact and implementing smart ways to allocate funding to those organizations, while generating financial returns, are urgent issues to be solved.

Students tackling this case will work at the intersection of social impact and financial return. Students are encouraged to design an impact investment case targeting refugee labor market integration that not only creates social impact, but also financial return for investors. Thus, entrepreneurial thinking is combined with rigorous financial modelling to align both financial and social returns in a meaningful way. The goal of the case is to allow students to think entrepreneurially, conceptualize financially viable and socially meaningful solutions, and identify ways to implement these in the real world.

AuthorMarc Haßler
InstitutionMaastricht University School of Business and Economics, The Netherlands
Competition Year2017
PlaceThird Prize
TrackSustainable Finance
Key WordsCSR, Socially Responsible Investing, Environmental Performance, Social Performance
CoursesSustainable Finance, Strategic Management, Finance, Business Sustainability, Business and Society, or Environmental Entrepreneurship
Target AudienceMBAs, Undergraduates
Permission rightsThis case is part of the oikos free case collection. Download a free online copy below. If you are a faculty member and you are interested in teaching this case, you can request a free teaching note by sending us an email to freecase@oikos-international.org.
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oikos International

posted June 19, 2017

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Faculty from University of Denver, Technical University of Munich, University of Hyderabad and Institute of Rural Management Anand win first prizes in oikos Case Writing Competition 2017

We are proud to announce the winners of this year’s oikos Case Writing Competition 2017. Outstanding case submissions competed for prizes this year. In the Sustainable Finance track the the first prize goes to Vijaya Narapareddy Zinnoury from the University of Denver (USA). The first prize in the Social Entrepreneurship track is awarded to Joseph Satish V from the University of Hyderabad (India) and C Shambu Prasad from the Institute of Rural Management Anand (India). In the Corporate Sustainability track, the first prize goes to Reinhard von Wittken from Technical University of Munich (Germany).

Extended abstracts of our winning and runner-up cases will be available online in our oikos free case collection or at the Case Centre in June 2017. Inspection copies will soon be made available there as well. We will keep you posted.

You find all the prizes and runners-up below. Congratulations to the Winners of the oikos Case Writing Competition 2017!  

Winners of the 2017 Competition

Corporate Sustainability Track

Free Case!

1st Prize

The venture Freitag: From recycled bags to sustainable fashion by Reinhard von Wittken (TUM School of Management at Technical University of Munich, Germany)

2nd Prize

Uber and the Ethics of Sharing: Exploring the Societal Promises and Responsibilities of the Sharing Economy by Erin McCormick and N. Craig Smith (INSEAD)

Free Case!

3rd Prize

Wind in the Sails: Managing Social Acceptance of Large Wind Energy Projects in Switzerland by Anna Ebers Broughel (University of St Gallen, Switzerland)

Runner-up

Enrich Not Exploit: Can New CSR Strategy Help Body Shop Regain  Glory? by Syeda Maseeha Qumer and Debapratim Purkayastha (both from ICFAI Business School, Hyderabad)

Free Case!

Runner-up

Tongwei – Sustainability Entrepreneurship Through Market – Political Ambidexterity by Xyanwei Cao (XJTLU, China)

Social Entrepreneurship Track

Free Case!

1st Prize

Dharani: Nurturing the earth, fostering farmers’ livelihoods

by Joseph Satish V (Centre for Knowledge, Culture and Innovation Studies at University of Hyderabad, India) and C Shambu Prasad (Institute of Rural Management Anand, India).

Free Case!

2nd Prize

Coming to Fruition: Fresh Truck Aims to Increase Food Access in Boston

by Nardia Haigh, Anya Weber, Jennie Msall (all from University of Massachusetts Boston, USA)

3rd Prize

Bridge International Academies by Manish Agarwal and D. Satish (IBS Hyderabad, IFHE University, India)

Free Case!

Runner-up

eVidyaloka-Digital Classrooms for the Underprivileged by Atul Kumar Singh and Vanishree Sattiraju (XLRI Jamshedpur, India)

Runner-up

Ten Thousand Villages in Crisis: Can the Fair Trade Pioneer Survive and Flourish in an Economic Downturn? by Anna Kim (HEC Montréal, Canada) and Cécilia Renaud (CHUM, Canada)

Sustainable Finance Track

1st Prize

A Burrito Without Integrity: Is This Chipotle for Me? by Vijaya (Narapareddy) Zinnoury (Daniels College of Business, University of Denver, US)

2nd Prize

The Fall of SunEdison – A Solar Eclipse? by Alok Kavthankar and Indu Perepu (IBS Hyderabad, IFHE University, India)

Free Case!

3rd Prize

Refugee Labor Market Integration – An Impact Investment Case Study by Marc Hassler (Maastricht University School of Business and Economics)

Participants in the oikos Case Writing Competition 2017 were again truly international: the finalists come from institutions all over the world. Winning cases were selected in a double-blind review process by the oikos judging committee comprised of distinguished scholars from all around the world including Alexander Wagner (University of Zurich, Switzerland), Bala Krishnamoorthy (Narsee Monjee Institute of Management Studies, India), Carlos Romero-Uscanga (EGADE, Mexico), Debapratim Purkayastha (IBS Hyderabad, India), Delphine Gibassier (Toulouse Business School, France), Ewald Kibler (Aalto University, Finland), Madhukar Shukla (XLRI Jamshedpur, India), Martin Kupp (ESCP, France), Minna Halme (Aalto University Business School, Finland), Moritz Loock (University of St. Gallen, Switzerland), Roger Spear (The Open University, UK), Saurabh Lall (Aspen Institute, USA), Stefan Schaltegger (Leuphana University, Germany), Tessa Hebb (Carleton University, Canada), Timo Busch (University of Hamburg, Germany) and other leading faculty.

We also want to make an especial acknowledgement of our three track chairs Dror Etzion, (McGill, Canada), Lars Hassel (School of Business Umea, Sweden) and Thomas Dyllick, (University of St. Gallen, Switzerland) who supported the organization and review of the oikos Case Writing Competition 2017. And finally we also want to recognize the important contribution of Stefano Ramelli and Carlos Vargas oikos PhD Fellows in Sustainable Finance at the University of Zurich, who made the oikos Case Writing Competition 2017 possible.

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oikos International

posted June 1, 2017

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New Report: Digital Economy and Sustainability

Digitalization – the increased use of information and communication technologies (ICT) – is affecting all areas of our lives. Rapid progress in the development of hardware and software is steadily moving us towards a fully-digital society.

The ways how we learn, communicate, and consume are cases in point. Applications and devices make it “easier” (in inverted comma, because sometimes technology makes things more complicated or confusing) to do routine work or to stay in contact with each other. Many of them have already become so embedded in our daily experiences that it is hard to imagine living without them. Instant e-mail delivery, navigating with online maps, and an internet at our fingertips, available 24/7, has become second nature to us. The increased use of digital technologies to transfer money, to hail a taxi or to control energy consumption provides an illustration.

The impact of digitalization on our lives is profound. A typical day in the internet today comprises 2.3 billion GB of web traffic, 152 million Skype calls, 207 billion e-mails sent, 36 million purchases on Amazon, 8.8 billion videos watched on Youtube, and 4.2 billion Google searches.  The speed with which digital technologies continue to make inroads into societies is constantly on the rise. And the lines between the old economy and a new digital one are becoming increasingly blurred.

Against this background, Christoph Rappitsch explores the opportunities and risks of the digital economy for a broad sustainability agenda and thus for people, communities and the planet in the first oikos Associate Report.  Enjoy the read!

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oikos International

posted May 10, 2017

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oikos Finance Academy: the future of finance research, made present

Finance is changing rapidly. A growing number of investors, companies and policy-makers worldwide are slowly, but steadily, recognising the deep mutual interconnections between finance and sustainability. The COP21 agreement of last December and the growing adoption of responsible investment strategies are just examples of this more general trend. We may have finally embarked on the journey towards a financial system more respectful of people, the planet and the future generations.

We are, nevertheless, sailing on sight. Academic research serves as an important navigation system. However, many of the existing financial and economic models are not made for this journey, the outcome of which is still in the dark. The scope and complexity of the sustainability challenges ahead call for a new generation of finance scholars with highly creative, analytical and critical thinking. They will have to question the validity of the current systems and design new compasses made for the future. And this needs to happen now.

The challenge is huge, but there are reasons not to despair. From September 11 to 15 2016, fourteen young scholars gathered in Reading (UK) to discuss their research in the field of finance and sustainability. The occasion was the 6th oikos Young Scholars Finance Academy, co-organized by oikos and the Henley Business School. The aim of the Finance Academy platform is to support young researchers in finance and sustainability to advance their works and expand their international research network. The 2016 edition saw the engagement and support of an outstanding Faculty composed by Professor Jill Atkins (University of Sheffield, UK), Professor Michael Barnett (Rutgers Business School, USA) and Professor Sébastien Pouget (Toulouse School of Economics, France).

The young scholars received constructive feedback on their working papers from both the Faculty and other participants. The discussion topics ranged from the financing challenges for social businesses, to the integration of sustainability criteria in bank lending, to the relevance of low-carbon indices to tackle climate change, to name but a few.

oikos-ysfa-2016_2

The learning experience was further enriched by faculty workshops dedicated to important methodological, empirical and practical aspects of academic research. Throughout the Academy, the exchange of suggestions and ideas on sustainable finance continued: casually over dinner; surrounded by a stunning English countryside; or rolling on the Thames during a river cruise.

On September 15, the group finally moved to City of London to join a larger audience of faculty members, practitioners and young scholars at the oikos Roundtable “Academic Research and Sustainable Investing. Seizing the Synergies. The roundtable, co-organized by oikos and the Henley Business School and hosted by UBS, presented a further occasion to identify the main barriers for sustainable investing and explore next steps to strengthen the interactions between academia and practice. As it turned out, the need to further integrate sustainability into finance research – a clear priority on the oikos agenda – resonated strongly with all attendees.

In the tradition of previous academies, the overall event was extremely well-perceived by all the participants and faculty members. “The oikos Finance Academy was one of the best experiences in my PhD so far. I highly recommend it for sustainable finance scholars” said, for instance, Helen Toxopeus from the Erasmus School of Economics (Netherlands). Of the same opinion is also Anna Geddes, from ETH Zürich (Switzerland): “The academy was the perfect forum to gain valuable and constructive feedbacks on my PhD work”. Most importantly, the Finance Academy certainly facilitated the meeting of some extraordinary researchers committed to making a positive impact in the way finance is understood, taught and practiced. And considering the quality of their works, they are already making it.

by Stefano Ramelli, oikos PhD fellow


esg-trading-simulationFinance Academy 2016oikos-roundtable

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oikos International

posted September 30, 2016

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