 My name is So-young and I'm a PhD student in civil and environmental engineering. I think I can share my unique experience as a student doing energy research here at Stanford. The thing that I like the most is that you can actually do the very interdisciplinary study. For example, my research topic is actually to study how to catalyze more investment capital, especially private investment capitals, to promote the clean energy innovation and also combating climate change. And as you see, this requires a lot of different academic disciplines, like for example, economics, finance, public policy and environmental engineering. And I've been getting a great support from faculties and professors across the entire campus. And you can actually take the courses that are actually built to be interdisciplinary. So I really want to share more about my experience and my own resources after this talk, but to give you a brief flavor of what I do as an interdisciplinary researcher here at Stanford, I'm going to show you my recent paper that analyzed market performance of low-carbon investing. So in other words, we analyzed whether investors in the capital market actually earns extra return, extra risk-adjusted return by investing in the firms that are emitting less carbon emissions. And I think Professor Berger had already made a great start for me instead, because this is a very important topic. And what Professor Berger and others studied he mentioned in his speech is great because they actually built one more layer of consensus on what we should do to combat climate change, because in 2000, we affirmed that the climate change is actually happening and this is man-made. And thanks to Professor Berger's study and others, we also know now that climate change will have profound impact on the functioning of a human society and also academic economic productivity. But what we don't have as a consensus is market performance, like saying what does that mean in the market to manage climate change? There are still today a very active debate in terms of theory and also in terms of empirical evidence that the links between the environmental and market performance are very mixed. So this is a very important topic. But what we achieved recently is at the Paris Agreement, they actually highlight this is very important to put the finance and public policy in this area as well. Like they highlight we need a consistent flow of a capital to combat climate change. And Alicia already gave the number, but the international energy agency gave like a bigger number that project, the world will require 53 trillion US dollars in cumulative term by 2035 to meet the goals that was agreed by Paris Agreement. But then if you see the scale, this cannot be covered by a few value or mission-oriented investors. We really need to change the entire market to move forward. But if you see the markets today, the capital markets today, there are only a few investors who are actually including the environmental factors into their investment criteria and try to align their returns with their investment portfolio, the non-traditional financial objectives such as environment. So majority of the investors remains resisting to manage the climate change because they think that managing climate change may lead to the suboptimal decision. So this actually leads to our fundamental question for our research that why investors think that being green is a suboptimal decision. And we think that investors really need a better understanding of how the market evaluates the firm's environmental actions. So this study actually provides a clear empirical evidence in order to clarify the relationship between firm's environmental actions and financial performance. But before going into this, I mean, I'm going to give you a lot of numbers and technical terms and everything, but you know, think about yourself. You know, if you are the MBA and you are planning to be an investment manager after this, or if you are just investing your own portfolio, and then, you know, if you are able to see considering those environmental factors can actually give you the actual return, then this will be very, very interesting outcomes. So what we really try to do is bring like people like you to really make your investment behavior to change. And yeah. So we set the four research questions, which are sequential. First, we just ask like whether this low carbon investing actually gives you the actual return. And the second question we ask is if there is any additional returns, is that just for the benefit of high risk, high return kind of investment strategy? Or do we actually find something extra like abnormal return that we call alpha? And the third question is then, you know, we really want to know what does that mean by investing in those carbon-efficient firms? And the fourth is we really want to have robustness on our observation as well. So the methodology that we use is coming from the financial economics. First, we use the portfolio analysis. We build a portfolio we call efficient minus inefficient portfolio. We call EMI portfolio for short. You can really simply think about you are actually changing your investment strategy that you are selling out your carbon-efficient firm stock and buying your carbon-efficient stocks. And you are putting no extra cost to change your investment strategy. And we track the performance of this EMI portfolio to see whether changing your investment strategy will really give you the extra returns. And then, you know, what you really expect as an investment manager or just individual investors is that you don't want to take extra returns to get extra, like you don't want to take extra risk to get extra returns. You really want to find the alpha. So we try to, we use the asset pricing model to price the whether this extra return can be explained by risk factors that is well known now at the worst and everything. And then we run the regression analysis to examine the relationship between firms' characteristics and carbon efficiency. And the robustness, we were running a lot of our correlation tests as well. So our data was 736 U.S. firms from 2005 to 2015. And our data set was very unique. We merged four database, two costs. They collect the absolute greenhouse gas emission data of each firm in their data set, which consists of 13,000 firms in the entire world. And the MSCI, they not only collect the environmental data, but they also provide the ratings on their ESG, environmental, social, and government's performance. And Compute Set and CRSV is well-known data set for very typical financial analysis, such as like a stock price, returns, and financial variables. So the main findings we have is like from the first portfolio analysis, we actually find our EMI portfolio exhibit large, positive, and cumulative return after 2009. So this is very interesting. I mean, there are many more ways to build the EMI portfolio, but I will show you just one simple case of EMI portfolio construction. But if you see the upper table, this is average return on EMI portfolio, you can definitely do the mess, like carbon-efficient firm stock actually outperform carbon-inefficient firm stock. But if you go see the later period after 2009, the difference become larger and also statistically significant. This is a very interesting result. If you see the cumulative return on the EMI portfolio, you can definitely see the cumulative return going upwards scale after 2009. The red line that I drew on the figure is September 2009, 2008, when Lehman Brothers supplied their bankruptcy. So this is a very interesting trend that we find. And we also try to talk about more about like what investors really consider. They really find the high-sharp ratio, which means you get extra risk factors to return for one unit of volatility that you have. So if you see, I'm going to just point out this sharp ratio in the later period, that all the EMI portfolio have that highest sharp ratio compared to other factor mimicking portfolio, which is very interesting for the investors as well. And now we want to find whether like where this extra return is coming from, whether it's from alpha or it's a bad time. And we actually find this investment strategy is actually giving you the abnormal return, and this is annualized to 3.5 to 5 per percent per year, which is huge for the investment managers. And this is very typical GRS test. What we do is we run, we regress the extra return on our EMI portfolio on other well-known risk factors. And if we find the alpha is positive and highly significant, that means there's something else that can explain our extra return than the other risk factors. And our statistical findings actually shows that yes, there are something more, and this is huge. And then we also find what does it mean, you know, investing in those low carbon companies. And we find that low carbon companies tend to be a good firms in terms of financial performance and also corporate governance. So you are not only investing for the extra returns, but you are actually investing in the good firms. So I mean, we cannot really firmly say by just five years of observation that, you know, carbon efficiency can be a good factor, but actually this can be a good signal that you want to find the good firms and also look for some higher risk adjusted returns. But what we really care about is also the robustness of our observation. So we tested some other macroeconomic factors such as energy market prices or unconventional monetary policy after 2009 financial crisis may affect this trend, but actually we find that our observation is very robust, apart from those changes in the market. So I'm going to fast forward it. We think that this is very important because if you are an investor, you really figure out whether managing this climate change is actually extra financial or financial itself. So because if it is extra financial, then you might bleach your fiduciary obligation by investing in those carbon efficient firms, but otherwise, then you can really align your own goals and your own return, your investment portfolios with the combating climate change goals. For the policy makers, you really need to figure out whether this is giving you extra negative or positive externality and be able to design the new policy that can really allocate the capital space on the carbon efficiency. So the contribution of this paper is to clarify the risk and return relationship in low carbon investing. Like previous studies were only asking whether it pays to be green, but for the investors to move, to change their behaviors, they need more. They need to know like how and when and why they're getting paid more by investing in those firms. So we are giving academic evidence to not only the academia, but also the investors that you are actually getting market incentives on considering the environment factors in your investment portfolio. And this clarification will really catalyze more investment in combating climate change. So I know it is very, very technically heavy, but I usually spend an hour to explain the entire thing, but you are able to pull out more details on the full report that you can find from that link. And also, you can always email me to ask questions about this paper or anything about the energy research or energy finance. Thank you.