Pacific Island nations are on the frontlines of climate change. On behalf of regional Finance and Economy ministers, Ekaterina Gratcheva and I analyzed the returns and management of their national funds, many of which are larger than 100% of GDP. These funds play an outsized role in providing for the future wellbeing of citizens in Pacific Island nations. The analysis aimed to fill the vacuum of comparable information about fund performance, fees, and management. Greater transparency empowers policymakers to make prudent decisions in the best interest of their citizens.
I helped formulate the strategy for benchmarking investment returns and risk in the context of limited data, and compatibility challenges. We built off of the work of New Zealand’s sovereign wealth fund in benchmarking the performance of active managers against reference portfolios comprised of easily implementable, low-cost, internationally diversified passive portfolios. I performed the quantitative investment analysis using R.
This past summer, I launched Teal Insights, a research consulting firm focusing on uncovering actionable insights relevant to emerging markets, sovereign debt, and sustainability. It has been a pleasure working with the Emso Asset Management team to assess and continue to enhance their approach to Sovereign ESG in emerging markets. This publication benchmarked their approach to Sovereign ESG against best practices I helped formulate at the World Bank. It also outlined areas for growth going forward. Teal Insights is working with Emso Asset Management on an ongoing basis on projects related to sustainable finance in emerging markets sovereign fixed income. The partnership aims to cut through the wishful thinking and hype that currently dominate discussions of ESG to provide reality-based insights and investment practices.
How can we fix the structural problems of Sovereign ESG investing, and better align it with the achievement of sustainability goals?
As ESG investing has progressed from its origins in equity markets to sovereign fixed income markets, what exactly does “Sovereign ESG performance” measure? We find that Sovereign ESG scores are highly correlated with a country’s level of income. This ingrained income bias has the potential to skew capital flows towards rich countries and away from developing nations, exacerbating SDG funding gaps, and incentiving investment in countries with higher per-capita CO2 emissions.
How can sovereign debt issuers manage rising climate risks, and finance the investments necessary to achieve the goals of the Paris Climate Agreement and the SDGs? As part of a team including former Chilean minister of finance, Felipe Larraín, we documented Chile’s experience re-orienting its sovereign debt issuance to be better aligned with fulfilling its ambitious sustainability goals.
Teal Emery is an independent research analyst who uses modern data science tools to uncover actionable insights relevant to policymaking, financial markets, and business.
He worked for seven years as an emerging markets investment research analyst for Morgan Stanley Investment Management (MSIM). He traveled regularly to Africa, the Middle East, and across the developing world to meet with economic policymakers, business people, and civil society. He has a strong interest in sustainability issues and created MSIM’s first sovereign ESG framework.
Over time, he increasingly moved towards a data science approach (using R and Python) to economic and financial analysis. In 2020, he left Morgan Stanley and began working as a consultant to the World Bank on analysis and thought leadership related to aligning sovereign debt investing with sustainability goals. Currently, he is building up his private sector consulting practice, and working to expand his toolkit for extracting insights from messy and unstructured data, such as text & spatial data.
Certificate in Data Science, 2019
M.I.A in International Finance & Economic Policy, 2013
Columbia University, School of International and Public Affairs (SIPA)
BA in Political Economy & Latin American Studies, 2006