Stanford dives into research on long-term investing

Stanford University’s Center for Sustainable Development and Global Competitiveness is launching the Research Initiative on Long-Term Investing, led by Ashby Monk.

The new research initiative brings together leaders from a number of Stanford learning centers to explore how to use new technology to calculate both short-term and long-term financial risk assessment for long-term investors.

Mr. Monk, who has served for 10 years as executive director of the Palo Alto, Calif.-based Stanford Global Projects Center and whose research has primarily focused on the design and governance of pension and sovereign wealth funds, said in a phone interview that the new initiative grew out of his growing involvement in researching how the rapidly evolving practices of data analytics and technology can help long-term investors.

“We can think through novel technological tools that can improve outcomes,” Mr. Monk said. “Modeling climate, modeling portfolios and everything in between that’s kind of related to the needs and challenges of a long-term investor.”

For example, Mr. Monk said that while long-term investors have traditionally used historical data to determine potential risks to their portfolios in a 30- to 40-year time horizon, there is no historical data regarding climate change.

One project of the initiative, he said, is to use data analytics and other technology to translate ESG metrics into financial metrics.

“So it’s not enough to say climate change or a specific hazard of climate change is going to affect a certain location,” Mr. Monk said. “We know that wildfire is going to affect Napa, as an example. The challenge for the investment community is translating those hazards so they can fit into traditional investment research.”

The goal is to use technology so investors can “begin to translate some of these non-financial metrics, which clearly are going to have financial outcomes, into dollars and cents.”

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