Hot topic: Nora Pankratz wins FIR-PRI grant to study financial impact of heat exposure

It’s a given that heatwaves affect us all, and not just on an individual level as we suffer through a sweltering day, but on a national level, too, as extreme temperatures wreak havoc on GDPs. But how about individual businesses: just how serious are the negative effects of higher-than-average temperatures? Armed with some help from a prestigious FIR-PRI Awards PhD research grant, Nora Pankratz, a doctoral candidate in the Department of Finance, is determined to find out.

Pankratz, who is supervised by Rob Bauer and Jeroen Derwall, received the FIR-PRI honour worth 10,000 euros at a ceremony in Berlin last month. She says she thought her doctoral research on productivity loss from heat and stock returns in Europe “was a good fit” for the competition brief, but knowing there were many other applicants with strong proposals made her selection a particularly welcome surprise.

“It’s quite nice to have the money to use for research trips or buying data,” Pankratz acknowledges. But, she adds, arguably “even more important” is the recognition that her research has been deemed valuable by the non-profit, multi-stakeholder FIR, which promotes sustainable investment, and the UN-backed PRI, a network of international investors working together to put the six Principles for Responsible Investment into practice.

Looking closely at the connection between economics and the wider world, and the associated issues of sustainability, is a longstanding interest for Pankratz. After an undergraduate degree at Mannheim University, she came to SBE for the Master’s in International Business’ sustainable finance track – and stayed.

“After my degree at Mannheim I wanted to keep studying finance, but something that went beyond a classical finance master’s. I thought that the sustainable finance perspective gave the SBE MSc a broader horizon.”


Of the move to Maastricht, she recalls, “I knew after my undergraduate degree that I wanted to keep studying finance, but I wanted to do something that went beyond a classical finance master’s, calculating MPVs and seeing what is most profitable. I thought that the sustainable finance perspective was one that was really needed, and also gave the degree a broader horizon. After I had already applied for many programmes, I saw this one at the last minute and said – yes, that’s the one.” Now in her third year as a PhD candidate, she is quick to emphasise just how valuable the support and encouragement she receives from Bauer and Derwall has been.

So what will her research aim to tell us, and how will she find the answers?

“Essentially we want to look at how firms react to shocks in heat exposure. We know that extreme heat can be quite detrimental for individuals, and that economically, looking at GDP, growth or units of output, we see the losses at national level when there are shocks in heat exposure. But the only thing that has not been studied yet is at the firm level, and how companies react to shocks in heat exposure. This is important to know, given that it will be getting warmer – and that heat shocks will become more frequent. In the Netherlands there used to be a heatwave every three years, but now it’s every second year.”

“How companies react to shocks in heat exposure is important to know. In the Netherlands there used to be a heatwave every three years, but now it’s every second year.”


Pankratz continues: “Beyond some really small studies, no one has looked at this issue in general. So we are trying to set up a study on the baseline, to see how it works in aggregate, and to see who reacts more strongly and less strongly. Of course in agriculture, you will expect that the effect will be really pronounced, because crops’ performance is related to temperature, but there are impacts elsewhere as well.

“What I’m doing at the moment is technically a little bit tricky. We draw on 10,000 weather stations from Nasa for the temperature data, and we link this large data set to firms in the US and Europe, many of whom have subsidiaries all over the world, and study the effect on their financial performance. At the moment I am awaiting the results for the full data set.”

Is this the kind of research made possible by the increased amounts of data available to researchers – a big data project, in other words?

Pankratz laughs. “Hmmm… let’s say it’s an almost-big data project. Medium data, perhaps.”

Returning to the FIR-PRI honour, she says, “I started off from scratch on this project, and when you work out something by yourself you are always a little bit insecure about whether it’s a good idea. [As a PhD student] doing this for the first time, it’s amazing to have won this award, and even better that it means someone has said, ‘Yes, this is a really good idea’ – and to see such interest in the topic. It’s nice to be in a field that feels new, and is so topical at the moment.”

Photo: (c) Michel Saive