Climate finance student Sydney Paul showcased on global stage

As part of her MSc at the University of Edinburgh Business School, Sydney completed a scholarship with the MSCI Institute, part of a world-leading provider of investment analytics and indexes. Her work was chosen to showcase how MSCI Institute education programmes are connecting the next generation of students with real-world investment challenges.

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Working with MSCI and having my research featured during New York Climate Week gave me confidence in translating complex academic work for a wider audience. MSCI is a leader in physical risk metrics, and being part of their platform was a reminder that the questions I was exploring in my dissertation are the same ones actively shaping how investors and policymakers are thinking about climate risk.

Sydney investigated how U.S. municipalities are managing physical risk exposure. Using the example of California, she showed that bond market investors appear to reward municipalities that spend more on adapting to wildfire risk with lower borrowing costs. Her findings suggested that the financial benefits of adaptation may extend beyond reducing physical damage, and that investment in resilience could also be associated with a lower cost of raising capital.

The most relevant and actionable finding was on the mitigation side. Fire expenditure per capita was associated with a reduction in yield spreads of between 9 and 22 basis points per standard deviation. This shows that bond markets are responding to how municipalities manage physical risk exposure.

For the MSCI Institute, working with Scholars like Sydney brings fresh perspectives to their research.

At the MSCI Institute, we support initiatives like the Scholars Program because we believe the next generation of researchers will play a vital role in shaping the future of our industry. By bringing fresh perspectives and innovative thinking to some of the most pressing challenges facing finance, these collaborations help advance research while nurturing the talent that will drive the industry forward.

Congratulations to Sydney on your achievement.