While finance is a vast and multifaceted industry, there are certain principles that underpin every decision or transaction made by it. This post is an explanation of these principles.
Time Value of Money (TVM)123 This principle says that money available earlier is worth more than an identical sum available at a later time; so money in the past was worth more than the same amount today, and any amount today is worth more than the same amount at a later date.
The reason this happens is threefold: 1. Interest:45 money available at an earlier date can be invested to earn an interest that increases that total quantity of money available at the later date. Interest is a fee paid to any entity (such as an individual, a group, or an organisation) when that entity allows another entity to use its money. For example, if a person deposits their salary in a savings account, the bank pays them interest for keeping the money and making it available for use by the bank. Conversely, if an organisation gives another organisation a loan, the borrower pays the lender interest as a fee for being able to access and use those funds.
2. Compounding:67 in finance, interest is of two types- simple interest and compound interest. If money is invested so that it earns simple interest, it will earn interest on the original sum that is invested, and only on that amount. Let’s say an individual invests INR 1,000 for 5 years at a simple interest of 10% per annum, they will get an interest amount of INR 100 per annum for 5 years if they do not withdraw any of the original money they deposited (the INR 1,000 which is called the “Principal” in finance). Therefore at the end of their investment period, they will receive INR 1,000 + INR 100 + INR 100 + INR 100 + INR 100 + INR 100 = INR 1,500.
Compound interest pays a higher rate of interest, because as long as the interest amount earned at the end of the first year was not withdrawn, that INR 100 of interest would also earn an interest (unlike SI which only pays interest on the principal amount of INR 1,000). So, if the individual who invested the INR 1,000 had invested at a rate of 10% compound interest annually, at the end of Year 1, they would receive the same amount as with SI- INR 100, but at the end of Year 2, they would receive 10% interest on INR 1,000 + 10% interest on the INR 100 interest amount that was added to the investment at the end of Year 1. Therefore at the end of Year 2, they would have a total amount of INR 1,000 + INR 100 + INR 100 + INR 10 in their account.
1,210 (Last year total 1,100 × 10% = 110; 1,100 + 110)
3
1,300 (Last year total 1,200 + Next 100 interest)
1,331 (Last year total 1,210 × 10% = 121; 1,210 + 121)
4
1,400 (Last year total 1,300 + Next 100 interest)
1,464.10 (Last year total 1,331 × 10% = 133.10; 1,331 + 133.10)
5
1,500 (Last year total 1,400 + Next 100 interest)
1,610.51 (Last year total 1,464.10 × 10% = 146.41; 1,464.10 + 146.41)
Tabular explanation of the difference between calculations for simple interest and compound interest
Therefore in SI, each year the interest is always INR 100 (just 10% of 1,000), added without change, but in compound interest, each year new year interest is calculated on a bigger amount (previous year’s total), so the yearly interest keeps growing. Notice the difference- via compounding, the investor would have earned INR 110.51 more after the five year period of investment.
3. Inflation:8 The final reason is something called inflation, which is the rise in the general price levels in the economy (that is, in general, the prices rise or the amount you can buy for a certain amount of money reduces, even if some things remain static in price or may have even reduced in per unit price), which makes it so that the same amount of money will purchase fewer goods and services at a later date, since they have become more expensive in comparison to an earlier date.
Risk In finance, “risk” means the uncertainty or variability of returns associated with an investment.910
There are multiple types of risk in finance. Some risks affect everything, and they simply cannot be avoided, but others can be minimised.
1. Systematic (or sometimes called systemic) Risk:11 those risks that affect the entire national economy, or in these interconnected times, affect most of the world at the same time. The 2008 subprime financial crisis was an example of one such issue. Imagine somebody, may it never be so, lives in a country that is at war- most sectors in the economy of such a country are likely to be affected by the war. It is unlikely that they could invest in a sector that is not affected at all, not even indirectly. Such risks are simply impossible to minimise. How to know if something is a systemic risk- ask, can the risks be avoided? No? It’s systemic.
2. Unsystematic (unsystemic) Risk:11 those risks that affect only one sector in the entire economy, or an industry, or even one company. Imagine a corruption scandal erupts at a particular company- the risk will be limited to the company, or at most the industry the company belongs to, rather than spread through the entire national economy. Can the risks avoided? Yes, easily.
Understanding risk helps individuals make better decisions. There are several specific types of risk that are explained briefly in the table.
Type
Meaning (Simple Words)
Example For Beginners
Market Risk
Prices move because of the whole market
Stocks fall when economy dips
Credit Risk
Borrower may not repay money
Person takes a loan and can’t pay it back
Liquidity Risk
Can’t sell asset quickly for fair price
You own a rare toy, but no one wants to buy it today
Operational Risk
Failure inside a company (mistake, fraud)
Computer glitch at a bank
Inflation Risk
Money loses buying power over time
Prices of groceries go up, money buys less
Currency Risk
Foreign money value changes
INR to USD exchange rate changes
Reputational Risk
Bad publicity affects business
News breaks that a company did something unethical
Types of risk
Risk and Return Tradeoff1213 Now, in the example in the Time Value of Money section, we knew exactly how much interest would be earned by the investment. However, there are many avenues of investment that do not guarantee any returns, and may even lead to losses.
Generally speaking, the higher the risk any investor takes, the higher their expectations of returns for that risky investment. Think about it- if they could achieve the same returns for a lower amount of perceived or actual risk, then would they not opt for getting the same returns for the lower returns? In this way, each percentage point of higher risk taken must reward the risk taker with greater returns, or they would have no incentive to take the extra risk at all.
This is called also called the Efficient Frontier. It is a graph where the x-axis maps the risk taken, and the y-axis represents the returns for each point of risk taken. Points to keep in mind: 1. For any given level of risk, the aim is to receive the highest possible expected return; and 2. For any given expected return, the aim is to take the lowest possible risk.
Any investment that doesn’t meet these conditions is inefficient: either the investment involves too much risk for the amount of returns they are offering, or too few returns for the amount of risk being taken.
But what is “too much risk”?
Every individual has a particular “Risk Tolerance”, or their personal capacity to withstand losses in case something goes wrong with their investments. Investors must always understand what their personal capability is to stomach losses, and this is also why investments must be risk efficient, so that on the occasion of a loss, that loss is not more than they can tolerate. This is a matter of personal comfort with loss.
Risk tolerance is determined for each individual via multiple factors, such as how soon they need the money invested- those with long investment horizons (let’s say 50 years for example), may invest and easily tolerate shorter term losses since their investment has the time to build back up (this may never happen, but they still have the time to see if it will). Another factor is how much money they have outside of the particular risky investment in question. Those with a large nest egg will naturally feel safe even if the entire amount invested in the riskier investment were to disappear.
Every individual has a different personal relationship with financial risk, which they must understand thoroughly and stay within their own limits.
Diversification14151617 Diversification is the risk management strategy of spreading investments across various assets to reduce exposure to any single investment (an asset is anything that will earn you returns in the future, this post has other such definitions). Diversification is best explained as not putting all your eggs in one basket. By spreading investments across multiple assets classes, geographies, and industries, an investor gains the benefit of never leaving their entire investible corpus or all their savings at the mercy of an unsystematic risk event. If there is an event that affects the entire economy, diversification will not help for any asset classes that are based (fully or partially) in that region, but this too can be diversified against these days- it is now possible to invest in other countries, and this works against the kind of systematic risk that spreads only within the boundaries of a particular nation. In case the risk event has spread across the globe… well, that’s you done for the moment.
Efficient Market Hypothesis18192021 Imagine if an individual wanted to buy a house, and the only thing they know is the area they wish to purchase the house in, and what their own budget is. They find out that in that area, no house sales have taken place at all in the last few years (even though it is a residential area with 100s of houses). How would such a person determine what buying the house in the locality would cost them?
They won’t, because there is no historic price or volume data available at all, and they may withdraw from buying in the area. It is also possible that they decide to pay whatever they are asked for as long as it is within their budget, but there is no way for them to know whether they are receiving the correct value for the money they are being asked to pay, since there is no comparison available.
Now imagine two houses are sold in the same area- let’s say one for INR 30,00,000 and another for INR 35,00,000: so now the buyer has price data and volume data both- two houses, and around INR 30-35,00,000. Are they likely to offer somewhere in the vicinity of these numbers for any house they may wish to buy, or are they likely to offer much less or more than the established price level? In case the buyer chooses to offer less than the established price level, they are unlikely to get any sellers, correct? And why would they offer much more than the established price level?
In a financial market, when the historical price and volume data is known, that market is considered to be at the first level of market efficiency, called Weak Efficiency. It is data without which no fair transactions are possible.
Now, let us say the buyer decides on a few houses they really like, and to find out more about them, they go and ask neighbours about whether those houses are well built, or have any issues. etc. This information is publicly available, and is likely to shape their opinions about the properties in their shopping cart. Let us imagine one of the houses has a well known termite problem- is this new publicly available information likely to change the buyer’s valuation of the product? Then they find out another house in the locality that they have their eyes on has built in parking space for 5 cars- even if they themselves don’t have five cars yourself, are they more likely to look at this house more favourably? Perhaps offer a little more for it in comparison to other houses?
In a financial market, this is the second level of market efficiency. It is called Semi-Strong Efficiency. All publicly available information is known to everyone.
And now back to 1984: Strong form market efficiency, where there is no private information- all information, no matter how seemingly private, is known publicly. Clearly (thankfully), such a world does not exist. In the context of markets, this means that there will always be insiders who will know more than outsiders.
One thing to note here before we move on- since we’re talking about financial markets, the theory is about stock prices.
Information Asymmetry222324 Information asymmetry is the situation where one party in a transaction possesses more or better information than other parties, which leads to outcomes that are optimal only for the party with the good information.
Information problems have significant implications for financial markets. For example, because borrowers know their own financial conditions better than lenders, lenders may not be able to assess the potential borrowers true creditworthiness. Assets may also be priced wrongly due to information asymmetry, again causing inefficiency in the market.
There are several market intermediaries that help lower information asymmetry, such as credit rating agencies that assess an individual or organisation’s creditworthiness so that lenders may have a level playing field; auditors, who provide independent verification of organisation’s financial claims, and even IPO grading agencies (IPO = Initial Public Offering) that independently evaluate a company’s financial credentials when it is issuing shares to help investors make more informed decisions before subscribing to that IPO.
Agency252627 A Principle-Agent relationship is the relationship between the owners, or Principals, and the people who work for them, such as managers, or Agents.
The larger an organisation, the more agents there will be, and the more information asymmetry there will be between the owners and their agents. Add to that the fact that Agents and Principals have very different inherent motivations, and it’s easy to see conflicts of interests arising between these parties.
The Principal-Agent problem can manifest in a number of ways, for example, managers may be more interested in short term profits while shareholders may wish to build their organisation up to ensure long term value; or managers may avoid risky but profitable projects over the worry that if it goes wrong they may lose their job even if the shareholders would prefer to go for the project, etc. Information asymmetry exacerbates these issues, as managers typically know more about what is happening in the company and the decisions being taken than shareholders.
Several mechanisms exist to counter agency problems. Monitoring agent behaviour and decisions through audits and oversight as well as strong corporate governance helps ensure management acts appropriately. Aligning the incentives of the management and the shareholders can be done through compensation packages that include profit-sharing with employees.
Stakeholders2829 All those individuals, or groups of individuals, who are affected by the activities of the company are stakeholders of that company. Stakeholders may be internal or external. The table below has examples:
Type
Example
How They’re Impacted
Internal
Employees
Their jobs, pay, and stability depend on the business.
Internal
Management
Make decisions and want success for their own reputation and bonuses.
Internal
Board of Directors
Set the company’s big-picture vision, provide oversight, and uphold good governance.
Internal
Shareholders
Invested money in the company, want profits and growth.
External
Customers
Use the products or services produced by the company, seek quality, safety, and value.
External
Suppliers
Sell goods and supplies, need reliable buyers and prompt payments.
External
Lenders
The company owes them money.
External
Debtors
They owe money to the company.
External
Community
Care about jobs, environment, local development.
External
Government
Collect taxes, set regulations, interested in company compliance and economic contribution.
Every stakeholder benefits in some way when the company succeeds, and can be hurt if things go badly. In finance, all decisions were made earlier from the perspective and for the benefits of shareholders only. This is now changing towards more holistic stakeholder management which balances (or attempts to) the shareholders’ requirement for profits while also making sure that other stakeholder’s points of views are incorporated into decision making. This is called Stakeholder Capitalism (as opposed to regular capitalism), and it aims to create long term value for everyone affected by the company rather than just prioritising shareholders.
These are a web of financial concepts that build all financial logic. All higher financial concepts are based on one or an interaction of these concepts. I’ve explained the very basics of these concepts here from my own understanding, but please use all the sources provided through the post as a further reading library.
Information is considered material if its inclusion or exclusion could significantly affect stakeholders’ judgments. In accounting, it is a concept from Generally Accepted Accounting Principles (GAAP) that asks whether omissions or misstatements in financial reporting would influence the economic decisions of users.12 This is often called the Materiality Threshold, or the limen at which financial information becomes significant enough to potentially influence the decisions of users of financial statements, such as investors, stakeholders, or auditors. Both quantitative and qualitative factors are involved in setting and applying these thresholds, and there is substantial professional judgment involved.3
Materiality Thresholds23 Quantitative thresholds provide a numerical basis for determining whether a misstatement or omission is material or not. For example, a company may decide that if an incident affects their gross revenue by 1%, they will inform stakeholders about it. That percentage can be anything that the company decides, for instance, their threshold may be 5% of post tax net profits, or 3% of EBITDA, etc.
Qualitative thresholds reflect circumstances where the nature or context of an item makes it significant, even if the amount involved is not large, and typical examples include information that may lead to a different rating by analysts if they knew about it, information that will affect whether the organisation has to comply with different regulations (say a small change in numbers that would lead to an Indian company needing to comply with Section 135 of the Companies Act, 2013, which prescribes the quantitative floors for which companies must participate in mandated CSR). Other issues that may be considered are likely to be changes in earnings trends, changes in key ratios, anything that has an impact on the company’s reputation, or any other situation that involves a change in stakeholder risk perception.
Materiality thresholds ensure financial information is decision-useful for stakeholders. Regulatory frameworks require professional accountants and auditors to apply judgment and not just formulas in deciding what is material. This ensures that both the letter and spirit of decision-useful disclosure is respected for investors and other users
Another thing to note is that material issues are not static- they change over time with shifts in business models, regulations, stakeholder expectations, or major events.
Materiality in ESG45 Materiality in ESG determines which sustainability topics are most relevant not just to financial stakeholders, but to broader stakeholder groups including employees, communities, regulators, and civil society. Unlike accounting, ESG materiality often considers both quantitative metrics (such as emissions, water use, or injured employees per year) and qualitative factors (like reputation, regulatory compliance, or community relationships).
Double Materiality67 Double materiality means looking at two types of materiality while making decisions:
Financial Materiality: how ESG issues impact the company’s finances and operations; and
Impact Materiality: the company’s influence on the environment and society, such as its carbon footprint, labor practices, or community impact (even if those impacts do not affect financial performance).
Materiality assessments allow organisations to understand which matters are important, or material, for their stakeholders.
How to do a Materiality Assessment89 Frameworks like SEBI’s BRSR in India or the EU’s CSRD mandate ongoing materiality assessments and transparent disclosures for regulated companies, and they also want to know how the company has determined what is material.101112
Define objectives and scope: why is the assessment being done?
Identify and prioritise stakeholders: list all stakeholders, map how they are affected by the issue or project, and for each, explain how they can influence the company.
List potentially material topics: make a list of all topics that are material for the company and the different stakeholders (whether for financial or ESG materiality assessment).
Stakeholder engagement: understand through discussions, interviews, questionnaires, or any other such participative method what different stakeholders think about the issues at hand.
Materiality matrix: Score and rank topics by their importance to stakeholders (vertical axis) and their impact on the business (horizontal axis). The most important issues will naturally find themselves at the top right of the matrix, and the visual display will help prioritise the critical issues. At this point, it is important to understand whether the issue is time critical or issue critical, or both. Once you do have a handle on this, you can act on the most crucial matters.
Review: Review your findings, make any corrections as required- for example, perhaps there is a vocal stakeholder who is not as important in the scheme of things for your company, but a quiet one who is very important, so adjust your findings accordingly.
Act: Now you have your reporting priorities sorted, so go ahead and report. Make sure to review your materiality matrix annually, or whenever anything out of the ordinary occurs (if it requires an EGM, it also requires a review of your matrix).
Here’s an example of materiality matrix:
Materiality matrix of a hospital group:
Topic
Stakeholder Interest
Business Impact
Example/Notes
Patient Safety and Quality
Very High
Very High
Reduction of harm, regulatory compliance, central to brand trust
Data Security & Patient Privacy
Very High
High
Digital records, ransomware risk, GDPR/HIPAA provokes stakeholder concern
Affordability & Access to Care
High
High
Press, patient, regulator & government pressure for inclusive access
Medical waste, recycling, water conservation efforts
Hospital group materiality matrix
Pitfalls While doing the above, make sure to avoid the most common pitfalls, which are:
Not involving external stakeholders (relying only on internal voices leads to bias).
Poor documentation or lack of transparency in why and how topics were prioritised.
Treating materiality as a one-off exercise instead of reviewing it annually or when major events occur.
Not linking materiality to company strategy; using it only for reporting/compliance, not real decision-making.
Embedding materiality into an organisation’s core functions protects it from Financial and ESG related risks (I just call them FESG in my head nowadays), and using materiality-informed strategy will lead to better-than-competition, more resilient long term performance, as well as improved reputation: materiality is the bedrock of value creation and risk avoidance. This is why organisations should pay attention to it.
NB: This post is now updated to include the 18th consecutive toss loss.
It’s come to my attention that we have lost the last 17 18 coin tosses in One Day International matches for men’s cricket,1 so here’s a continuation of our unfortunate probabilities.
Every coin toss is considered an independent event- the outcome of one fair coin toss will not have any impact on the outcomes of any other fair coin tosses.
The probability of two independent events happening at the same time is the product or multiplication of the probabilities of the two events in question. This is called “joint probability”, so If event A has probability P(A) and event B has probability P(B), and their outcomes do not affect each other, the probability that both occur is P(A) × P(B).
#
Date
Opponent
Venue
Captain
Toss Result
1
Nov 19, 2023
Australia
Ahmedabad
Rohit Sharma
Lost
2
Dec 17, 2023
South Africa
Centurion
KL Rahul
Lost
3
Dec 19, 2023
South Africa
Gqeberha
KL Rahul
Lost
4
Dec 21, 2023
South Africa
Paarl
KL Rahul
Lost
5
Feb 6, 2024
England
Hyderabad
Rohit Sharma
Lost
6
Feb 9, 2024
England
Visakhapatnam
Rohit Sharma
Lost
7
Feb 12, 2024
England
Rajkot
Rohit Sharma
Lost
8
Aug 10, 2024
Sri Lanka
Colombo
Rohit Sharma
Lost
9
Aug 12, 2024
Sri Lanka
Pallekele
Rohit Sharma
Lost
10
Aug 15, 2024
Sri Lanka
Dambulla
Rohit Sharma
Lost
11
Feb 20, 2025
Bangladesh
Dubai
Rohit Sharma
Lost
12
Feb 23, 2025
Pakistan
Dubai
Rohit Sharma
Lost
13
Mar 2, 2025
New Zealand
Dubai
Rohit Sharma
Lost
14
Mar 4, 2025
Australia
Dubai
Rohit Sharma
Lost
15
Mar 9, 2025
New Zealand
Dubai
Rohit Sharma
Lost
16
Oct 19, 2025
Australia
Perth
Shubman Gill
Lost
17
Oct 23, 2025
Australia
Adelaide
Shubman Gill
Lost
18
Oct 25, 2025
Australia
Sidney
Shubman Gill
Lost
India’s 17 18 consecutive ODI coin toss losses in men’s international cricket
You’ll notice that once again the tosses have been lost across tournaments, three different captains, and multiple venues (home and away), and the calling captains choosing heads or tails at random and India still losing every time.
Now, at first I thought that the all format streak of losing 16 consecutive tosses and this ODI streak of losing 17 consecutive tosses were just one series of unfortunate events, but now I want to understand what the probability is of these being considered separate streaks and both “events” still occurring.
So here are the two overlapping streaks:
The ODI-specific streak (Nov 2023–Oct 2025):17 18 consecutive ODI toss losses. Probability = (1/2)^17 = 1/131,072 ≈ 0.00076%(1/2)18 = 1/262,144 ≈ 0.000381%; and
The all-format streak (Jan–Oct 2025): 16 consecutive toss losses across formats. Probability = (1/2)16 = 1/65,536 ≈ 0.0015%.
And the probability that these two have coexisted is just the multiplication of the two independent streaks, which is P = (1/131072) × (1/262,144) = 1/8589934592, or about 1/8,600,000,000, which is one in 8.6 billion1/17179869184, or about 1/17,000,000,000, which is one in 17 billion.
As of mid-2025, the world population was estimated to be around 8.2 billion.2 So if in the middle of this year, if every single person had tossed a fair coin TWICE, there is a possibility that these two streaks would still not have overlapped. It’s an astronomical rarity, so of course we’re on the wrong side of it, *depressed emoji*.
In probability theory, there is a concept of waiting time. Waiting time in streak probability asks how long before you see the streak in question happen? So here it will ask, “How many tosses, on average, until you first see a streak of n consecutive heads (or losses, or wins)?” For a fair coin, the expected number of tosses (waiting time) to see an uninterrupted streak of length n is approximately: En = 2(n+1) – 2.3
In the formula, “n” is the length of the streak.
For a streak of 6 coin toss losses, we will have to wait for
E6 = 2(6+1) – 2
E6 = 27 – 2
E6 = 2 × 2 × 2 × 2 × 2 × 2 × 2 – 2
E6 = 128 – 2 = 126 coin tosses.
So, for our first streak of 16 consecutive coin toss losses, the world waited with bated breath for 217 – 2 = 131,070 fair tosses;
For the ODI 17 18 coin toss loss streak, we waited for 218 − 2 = 262,142 219 -2 = 524,286 fair tosses; and
For both to happen together, we waited 131,070 × 262,142524,286 fair tosses, or 68,718,166,020, or more than 34 68.7 billion fair coin tosses- A NUMBER SO WILD (okay, calm down, calm down) even cricket fans don’t expect it.
What the hell, my guys?
NB: I just realised that the most widely accepted scientific estimate for the age of the known universe is about 13.8 billion years,4 so the chances of these two streaks happening at all, let alone together, actually involves numbers several times greater than the entire age of the universe in years. Personal suggestion to Shubman Gill- havan karwale bhai.
One day, a young Talib beat Laila with a radio antenna. When he was done, he gave a final whack to the back of her neck and said, “I see you again, I’ll beat you until your mother’s milk leaks out of your bones.” – A passage from the novel A Thousand Splendid Suns by Khaled Hosseini, which describes the lives of two fictional Afghan women.1
While the above quote is said to a fictional woman in a novel, the reality is that in just the past 12 months, Afghanistan’s Taliban government has: 1. Codified 35 restrictive articles banning women’s voices in public, requiring full Arabic-style hijab, and prohibiting depiction of humans or animals in media. Women may not travel, study, or appear in public spaces without a male guardian (mahram).2 2. Mandated that women adopt “Arabic hijab style” within five days, with imprisonment for violators. Families are held responsible for non-compliance.3 3. Prohibited women from entering three district parks, extending the preexisting national ban.3 4. Criminalised women speaking or singing audibly in public, across broadcast and real-life settings.4 5. Prohibited women from afternoon medical visits without male accompaniment, severely restricting access to care in provinces like Badakhshan.5 6. Authorised arrests of women and men for “moral corruption”; 38 arrests reported in nine provinces.6 7. Expelled all female medical students from health training colleges nationwide.7 8. Prohibited shopkeepers from talking to female customers in Takhar and Nangarhar provinces to “protect modesty”.8 9. Ordered women to block home windows to avoid being seen by neighbors.9 10. Blocked Hazara-led religious ceremonies in Bamyan and Daykundi Provinces ahead of Ashura.10 11. Facilitated dispossession of Hazara farmlands for Kuchi nomads under “historic restitution” justifications; over 25,000 displaced in 2024–25.11 12. Diverted international rations away from Hazara-majority central highlands to Pashtun-controlled areas.11 13. Marginalised Shia observances by defining “permissible Islamic behavior” under Sunni Hanafi doctrines.12
In all, in the past few months, Afghanistan’s Taliban government has entrenched a dual system of apartheid– gender and sectarian- now recognised by experts as constituting crimes against humanity and genocide risk indicators according to the UN and Human Rights Watch.
And yet, cricket remains nearly entirely silent.
ICC’s policy on political intervention in cricket The International Cricket Council (ICC) is cricket’s international governing body. It claims to uphold the autonomy of cricket via its official policy, which prohibits political appointments and undue government interference in the administration of national cricket boards, favouring free elections and board independence,13 and they can suspend a country’s membership for government meddling, with bans or warnings applied until compliance is restored.14
Here are some recent examples of this policy in action:
Zimbabwe (2019): The ICC suspended Zimbabwe Cricket for failing to ensure no government interference in its cricket administration, barring their teams from ICC events until the suspension was lifted.15
Sri Lanka (2024): Sri Lanka Cricket was suspended by the ICC due to evidence of government interference, including the sacking of board officials and attempts at regulatory control.16
The South Africa Precedent One does wonder what the difference is between apartheid South Africa, and present-day Afghanistan in ICC’s eyes.
In 1970, the ICC banned South Africa from international cricket due to racial apartheid policies that prevented non-white players from representing the national team and subjected touring players of color to discriminatory treatment.1718 This ban remained in effect for 21 years, until Nelson Mandela’s release and the dismantling of apartheid in 1991.1718
The ICC maintained the ban despite South Africa’s 1976 attempt to desegregate cricket through the formation of a non-racial governing body, the South African Cricket Union.1718 Only after apartheid’s complete dismantling and at the personal request of Nelson Mandela was South Africa readmitted to the ICC and Test cricket in 1991.17
Here’s a comparison of the actions of the Taliban government in Afghanistan with those of some other comparable governments:
Category
Taliban Afghanistan (2024–2025)
Apartheid South Africa (1948–1991)
Nazi Germany (1933–1945)
Myanmar Junta vs Rohingya (2016–Present)
Basis of Oppression
Gender, ethnicity, and religion (women, Hazaras, Shia, Tajiks)
Race and ethnicity (Black Africans, Coloureds, Indians)
Apparently not an apartheid according to the powers that be in Cricket
Negotiating with terrorists It’s evident that the ICC believes in being gentle with cricket’s resident terrorists. In April 2025, the ICC confirmed it would not cut funding to the Afghanistan Cricket Board and would instead “pursue dialogue and constructive engagement”.42 An ICC spokesperson told Sky News: “We are committed to leveraging our influence constructively to support the Afghanistan Cricket Board in fostering cricket development and ensuring playing opportunities for both men and women in Afghanistan”.43
Naturally, this approach has yielded no progress.
The India Connection I believe India’s geopolitics is directly shaping the ICC’s approach to Afghanistan, a pattern evident across multiple recent ICC decisions.
India is responsible for a large part of the ICC’s global revenue,44 primarily through the BCCI and the massive domestic cricket market, and Jay Shah, the son of Indian Home Minister Amit Shah, was elected unopposed as ICC chairman in December 2024, after serving as BCCI secretary and Asian Cricket Council chief.45 India has helped build Afghanistan’s cricketing infrastructure, provided technical training, hosted Afghan teams, funded stadiums, and arranged commercial sponsorships.46
While India does not formally recognise the Taliban government in Afghanistan,47 it (we the citizens, our elected politicians) have adopted a policy of “engagement without recognition.”4849 This means India maintains working diplomatic and economic relations with the Taliban regime, while refraining from granting it official, de jure legitimacy.49 We engage with the Taliban government as the de facto authority in Kabul for practical and strategic reasons, therefore granting it legitimacy.
India’s activities in Afghanistan under the Taliban include diplomatic representation, large-scale humanitarian aid, development assistance, and ongoing political dialogue, especially to safeguard its security and regional interests.50 This approach mirrors India’s policies towards other regimes like the Myanmar junta and Taiwan: open channels for practical coordination, yet withholding formal recognition, consistent with international law on diplomatic relations.5152
However, In October 2025, following the visit of Taliban Foreign Minister Amir Khan Muttaqi to New Delhi, India announced the upgrading of its technical mission in Kabul to a full embassy, a clear sign of deepening engagement, despite the absence of formal recognition.53
At this point, please also note that I do understand that sanctions against Afghanistan would be less effective than those against apartheid South Africa because the Taliban government, unlike South Africa’s white minority regime, does not depend on international legitimacy or economic integration with cricket-playing nations, and yet if India cared about the girls, women and minorities being oppressed in Afghanistan, they would be banned from cricket.
But India needs a counterweight to Pakistani terrorism against India. Afghanistan under the Taliban serves as a strategic buffer and potential ally in India’s regional security calculations,54 and the Afghan women and minorities are simply not part of the consideration. And as we know, India’s power has affected ICC’s decisions previously.555657
What’s happening right now Australia remains the only country in cricket that has taken a stand on the matter by refusing to play bilateral matches, citing deep discomfort with the Taliban regime’s escalating crackdown on women’s rights and participation in sport. Since 2021, Cricket Australia has cancelled multiple series, most recently a T20 fixture in 2025.5859
Australia also hosts exiled women cricketers from Afghanistan, such as Benafsha Hashimi and Firooza Amiri, the latter of whom has pleaded that the ICC doesn’t even need to ban the Afghanistan men’s team: “Don’t ban the Afghanistan men’s side from playing international cricket but do expect them to do more for the women and girls who don’t have the same rights they do,” Amiri told ESPN, once again underlining cricket’s silence.60
In March 2025, Human Rights Watch addressed an open letter to ICC Chair Jay Shah, urging the council to suspend Afghanistan’s membership until women and girls regain access to education and sport. Minky Worden, HRW’s Director of Global Initiatives, argued that the ICC’s permissiveness “places it on the side of the Taliban, not the women cricketers in exile”.61
Human Rights Watch and several national cricket boards, including the England and Wales Cricket Board (ECB), have pressed the ICC to adopt a formal human rights policy aligned with UN principles, similar to frameworks now required by the International Olympic Committee (IOC).62 The IOC previously suspended Afghanistan’s Olympic Committee in 1999 for barring female athletes- an exact parallel to today’s situation.
Publicly, the council maintains support for the displaced Afghan women cricketers in exile but has stopped short of recognition or reallocation of resources to them.63 In April 2025, the ICC announced a separate initiative to support displaced Afghan women cricketers through a task force partnering with Cricket Australia, the England and Wales Cricket Board, and the Board of Control for Cricket in India.64 Critically, however, this new funding stream does not reduce or redirect any money from the ACB- the board responsible for excluding women continues to receive full funding.65
As of 2025, the ICC continues to provide the Afghanistan Cricket Board (ACB) with approximately $17 million USD (£13 million) in annual funding, exclusively allocated to men’s cricket.66 This funding persists even as Afghanistan remains the only ICC full member without a women’s team.
Meanwhile, while the International Cricket Council continues to sleep on their job, 2.2 million girls remain banned from school and university education indefinitely.67
NB: I’m not expecting this to make any institutional changes. I’m not expecting any difference in the state of the suffering Afghans. I have no hope of anything getting better. I even understand the geopolitics and the realpolitik behind the Indian Government’s engagement with the terrorists- they’re trying to choose fewer terrorism deaths for Indians over people they are not morally responsible for. I’m writing because I’m exhausted. I’m tired of women paying the price and men absconding responsibility, even traveling the world playing goddamn cricket with impunity while at it. And I’m writing because who else will? The terrorised Afghans certainly cannot. The exiled Afghan cricketers can barely speak out even in a supposedly safe nation like Australia. But perhaps one day this piece may serve as the evidence that people knew what was happening, or even just show those who suffered that we saw them. You were not erased, my sisters.
Economic and financial impacts of climate change First, some explanations. In climate change contexts, economists use “Economic Loss” to mean the total monetary impact on communities, sectors, or entire countries, including uninsured damages and broader ripple effects.12 Economic loss is further divided into two types of loss, pure economic loss and consequential economic loss.
Pure Economic Loss is financial harm that occurs without any associated physical damage to property or persons, such as when bad weather warnings keeping people away from events they would otherwise pay to attend.34Consequential Economic Loss is loss that happens as a consequence of that physical impact, even if not immediately obvious, for example if excessive rains damage a local shop, which then has to shut shop for repairs compromising sales for the period.34
These distinctions matter because even when it is not immediately evident, climate change drives losses through the economy in multiple ways large and small. Think of unemployment in a region due to a climate exacerbated disaster such as a forest fire which burns down parts of a town or a city, let’s say some warehouses or farms burn down, not only are assets lost in such cases, so is future consumption due to loss in employment income for those who worked in those warehouses or farms. Further, not every loss is or can be insured, but losses such as those caused by consumption loss after considerable climate disasters tend to have ripple effects across economies with no clear physical starting point.
Financial Loss refers to losses in actual money or other financial instruments (for example unencashed cheques lost in a flood event). It’s a more direct concept and includes only what can be counted.23
Understanding these terms helps us understand the following statistics a little better, while also realising that they can never grasp the full magnitude of climate damages.
Economic losses from natural disasters totalled $368 billion globally, driven by hurricanes, severe storms, and record heatwaves. As mentioned, the first half of 2025 is trending higher. In India, climate disasters cost India over $12 billion in 2025, with floods and heatwaves hitting agriculture and productivity especially hard.5 Projections show GDP per capita losses could reach 2.13% by 2025 and exceed 25% by 2100.5 Indeed, if global warming reaches 3°C by 2100, cumulative economic output could shrink by 15–34%. The net cost of inaction translates to a loss equivalent to three times current global health spending by 2100.6
Insuring against climate risks helps manage losses from climate change impacts such as extreme weather events, floods, droughts, and tropical cyclones, as well as more mundane events like too much or too little weather that affect economic performance, such as agricultural output, disrupted sports matches, rained in vacation seasons, and so on. The costs and frequency of extreme weather events have soared, with $100 billion in insured losses recorded in the first half of 2025 alone,78 which is 40% higher than the same period in 2024 and more than double the 21st-century average7.
Term
What it Means in Practice
Pure Economic Loss
Financial hit without physical damage—like lost ticket sales because a bad weather warning kept customers away, even if nothing broke.
Consequential Economic Loss
Costs that ripple out from a disaster—like lost income when a business shuts for repairs, or when workers lose jobs after a factory burns.
Financial Loss
Tangible money lost—cheques that float away in a flood, crashed stock market values, or direct property damage costs.
In summary
Risk The standard formula for risk is: Risk = Probability × Impact, where probability is the simple likelihood of an event happening, like we studied in school (here’s a post that talks about probability in deeper detail), and impact is how severe the consequences of the event would be, if it were to happen.9
In practice, insurers and climate researchers use risk matrices or quantitative models to assess and rank multiple risks in order of urgency, severity and other metrics. The formula for these kinds of advanced risk models can substitute “probability” with metrics like frequency, exposure, vulnerability, or asset value, and here the formula can change to something closer to: Risk = Threat Frequency × Vulnerability × Asset Value.910
Financial institutions increasingly conduct climate stress tests to assess resilience under various climate scenarios. These tests measure CRISK, which measures the expected capital shortfall under climate stress scenarios, and functions similarly to financial crisis stress tests but incorporating climate risk factors.10 During the 2020 fossil fuel price collapse, major global banks experienced substantial CRISK increases; Citigroup’s climate-related capital shortfall rose by $73 billion in 2020 alone.10
Stress testing involves three steps: measuring climate risk factors (often using stranded asset portfolio returns as transition risk proxies), estimating time-varying climate betas for institutions, and computing capital shortfalls under stress scenarios.11
DON’T PANIC HERE’S AN EXPLANATION: It’s like asking, if climate disasters happen, how much trouble would this bank be in? A stranded asset portfolio is the collection of companies that the bank is lending to, or whose stocks it owns, that would suffer most if the world suddenly got serious about fighting climate change. From this we subtract the returns of some regular stocks so that we can isolate the impacts of climate change. So let us say an extreme climate event happens, and this portfolio crashes by 50% in market value (market value is the value the portfolio assets would get if sold in the open market). Climate beta is a way to understand how much the bank’s own share price responds to climate events, or to governments cracking down on transition sensitive industries that it owns in the stranded asset portfolio. If a bank has lent lots of money to an oil and gas company, it will have a higher climate beta. We use the share price of the bank because it provides a real-time, market-based reflection of how investors perceive the bank’s overall financial health and risk exposure, including its sensitivity to climate-related events, making it a practical and observable indicator for assessing potential future losses and calculating stress test outcomes, which basically means that markets process information faster than accountants. Continuing with our example, let’s assume the bank has a climate beta of 0.6.In extreme climate stress (50% fossil fuel portfolio crash), this bank’s stock price would fall by 30% (0.6 × 50%). The final step is to understand, if the worst possible climate scenario happens, how much money would the bank need to stay afloat, for which the following formula can be used: Capital Shortfall = (Minimum Required Capital that a bank must maintain as mandated by the government) – (Bank’s Remaining Equity After Climate Shock).
Another example: Portfolio crash = 50%, climate beta = 1.2, therefore the bank’s stock price crashes by 60%. Now suppose the bank has total assets (the market value of the loans it has given out, the shares it owns, and any other assets) of $100, and the government has said that at the minimum it must have 10% of this amount with it at all times (the bank cannot use this money), so 10% of $100 is $10. Now let us say that the same bank had $40 in equity share capital, but because the price of this $40 crashed by 60%, it is now only worth 40% × $40 = $16. Since the $16 > the $10 the government said the bank must always have, this bank is safe. It is easy to see that banks that have different combinations of numbers will have different results.
Climate risk is not an abstract concept any longer simply because it is happening all around us, and we’re all suffering from it (and also because financiers have made formulae). Areas that suffer frequent climate impacts, whether (hehe, weather) direct or indirect are likely to suffer more financial consequences and have poorer asset protection since insurers would prefer to limit losses.1213 It just so happens that these geographies are also the previously colonised Global South now suffering from the extended consequences of colonialism and the industrial revolution they did not partake in.1415
In 2023, the global insurance protection gap reached 67%- only 33% of $357 billion in economic losses from natural hazards were insured.16 This gap widens dramatically in developing countries, most of which are the historically colonised nations, where less than 10% of disaster losses have insurance coverage;5 Africa insures merely 0.5% of climate-related losses.17 Without intervention, uninsured global losses could double to $560 billion annually by 2030.16 Regions may become effectively “uninsurable” as coverage becomes inadequate, inaccessible, or prohibitively expensive.9 Another relevant stat: research indicates each 1% increase in insurance coverage moves countries 5.8% closer to achieving Sustainable Development Goals.181920
The protection gap stems from multiple factors:
Unaffordable premiums: Rising climate-related losses push insurers to increase premiums to reflect heightened risk, further widening affordability gaps and leaving many unprotected.2122
Insufficient local risk data: In many emerging markets and developing economies, hazard maps and exposure data are incomplete, outdated, or inaccessible, limiting confidence in risk assessment tools and complicating underwriting decisions.2123
Lack of government coordination across ministries: Fragmented policy frameworks, inadequate integration of disaster risk management with financial protection strategies, and limited inter-ministerial collaboration obstruct the scaling of insurance solutions and premium support schemes.2124
Inadequate domestic financial sector development: In many emerging economies results in underdeveloped insurance markets, limited technical capacity among insurers and supervisors, low financial literacy, and weak distribution channels. These structural weaknesses restrict both the supply of insurance products and the demand from potential policyholders, perpetuating the protection gap.2125
Types of climate risk26 Climate risk refers to the potential negative impacts on society, ecosystems, or economies resulting from climate change. These risks are typically grouped into three main categories: physical risks, transition risks, and liability risks.
Physical Risks: These arise from the direct effects of climate change and are further divided into two subcategories:
Acute physical risks are event-driven, such as hurricanes, floods, wildfires, tornadoes, heatwaves, or intense storms. These can cause sudden and severe damage to property, infrastructure, and supply chains.
Chronic physical risks develop over a longer time frame. These include rising sea levels, gradual increases in average temperatures, changes in precipitation patterns, persistent droughts, land degradation, water scarcity, and ocean acidification.
Transition Risks: These are risks associated with the shift to a low-carbon economy and include challenges related to changes in policy, technology, market preferences, and investments. Examples include regulatory changes (carbon pricing, emissions limits), sudden shifts in market demand (e.g., decline in demand for fossil fuels), technological disruption (rapid adoption of renewables), or reputational damage if organisations are slow to adapt. Such changes may render some business models or assets less viable or even obsolete (these are called “stranded assets”).
Liability Risks: These stem from parties seeking compensation for losses they attribute to climate change. As regulatory requirements around disclosure and climate responsibility tighten, companies face increasing legal actions over failure to adequately manage or disclose climate risks, or for contributing to environmental harm.
More about stranded assets: To limit warming to 1.5°C, approximately 60% of oil and gas reserves and 90% of coal reserves must remain unburned, creating potentially $1.4 trillion in stranded fossil fuel assets globally.27 Coal-fired power plants face the highest stranding risk, requiring retirement 10-30 years earlier than historical patterns to meet Paris Agreement targets.28 Stranding extends beyond fossil fuels—aviation, heavy manufacturing, and carbon-intensive real estate also face obsolescence as the economy decarbonises. Physical climate risks like sea-level rise, floods, and droughts can also directly strand assets by making them uninhabitable or uneconomical. Buildings failing to meet emerging energy efficiency standards face early economic obsolescence, requiring costly retrofits or suffering reduced marketability.
The financial industry’s exposure toclimate change1011 The financial industry is exposed to climate risks on both sides.
In finance, buy side and sell side refer to the two broad categories of financial market participants and their roles in the investment ecosystem. The buy side includes entities whose primary role is to invest capital (money) for themselves or their clients, and their main goal is to generate positive returns from the purchase and management of these assets. Sell side entities provide investment products, research, and execution services to buy-side clients and often facilitate transactions between buyers and sellers.
Buy side entities face climate risk in the form of:
Asset Value Declines: Physical climate events can damage or destroy underlying assets (like real estate, farmland, or infrastructure), eroding the value of investments.
Transition Risks: As economies move to lower-carbon models, the value of companies or sectors exposed to fossil fuels, heavy industry, or outdated technologies may collapse, turning previously valuable holdings into “stranded assets”.
Market Volatility: Unexpected regulatory policy, carbon pricing, or shifts in investor preferences can result in sharp drops in certain securities, particularly where climate risks were previously underpriced, or even unpriced.
Reputational and Compliance Pressure: Asset managers are increasingly required to disclose their climate risk exposures, scenario analysis, and decarbonisation strategies under frameworks such as TCFD, EU taxonomy, and other local regulations.
And Sell side entities face them in the form of:
Credit Risk and Loan Defaults: Borrowers struck by climate disasters (flood, drought, hurricane) may default on loans as asset values drop or cash flow dries up. Large-scale disasters can lead to significant concentrations of defaults in a short period.
Collateral Devaluation: The value of physical collateral backing loans (properties, crops, factories) declines with repeated climate events or chronic risks such as sea-level rise or desertification.
Underwriting Risk: Insurers see more frequent and severe claims for natural disasters, complicating pricing and threatening profitability.
Rising Compliance and Capital Costs: Regulators increasingly require sell side firms to conduct climate stress tests, manage exposures, and allocate more capital against climate-vulnerable loans or portfolios (so that if their value suddenly declines, there is enough money to cover for it).
Some of the newer insurance instruments
Traditional vs. Parametric Insurance:10 Traditional indemnity insurance requires extensive damage assessment and claims verification, causing significant delays when communities need immediate relief. Parametric or index based insurance (called so because payouts are triggered by weather indices that measure heat waves, number of rainy days, wind speeds, etc.) trigger automatic payouts when predefined thresholds are met.
For example, if wind speeds in an area exceed 150 km/h, it may immediately send money to the people who are insured in that area, if rainfall below 200mm happens during growing season in an area, automatic payout will happen in that area, as long as data confirms that the threshold criteria were met. This brings transparency, expedites claims processing, and provides policyholders discretionary use of funds for their most urgent needs. Parametric insurance is also expanding to cover urban businesses, tourism, and logistics.
Catastrophe Bonds (CAT Bonds):28 Catastrophe bonds are alternative risk transfer instruments that connect disaster risk to capital markets. Governments or corporations issue these high-yield debt securities through Special Purpose Vehicles, attracting investors including pension funds, asset managers, and hedge funds. Investors receive attractive returns—typically higher than traditional bonds—as long as specified catastrophes don’t occur. However, if predetermined triggers are met (a cyclone reaching specific intensity, earthquake exceeding certain magnitude, or insured losses surpassing threshold levels), investors forfeit some or all principal, which immediately transfers to the issuer for disaster relief and reconstruction.
The CAT bond market has grown substantially, reaching approximately $40-50 billion by 2025, up from minimal levels in the 1990s when they emerged after Hurricane Andrew devastated the insurance industry. India is exploring CAT bonds as the country faces $9-10 billion in annual disaster losses, with single events like the 2013 Uttarakhand floods causing over $6 billion in damages.
Risk Pooling Mechanisms:2926 Regional catastrophe risk pools aggregate disaster risks across multiple countries, exploiting geographic diversification where weather events affecting one nation are unlikely to simultaneously impact others. Research shows optimal regional pooling can increase risk diversification by 35-40% compared to individual country approaches. The three major global pools demonstrate this model’s effectiveness:
The Caribbean Catastrophe Risk Insurance Facility (CCRIF) covers tropical cyclones, earthquakes, and excess rainfall across Caribbean and Central American nations.
The African Risk Capacity (ARC) primarily addresses drought risk across African countries, with some coverage for other perils.
The Pacific Catastrophe Risk Insurance Company (PCRAFI) protects Pacific island nations against tropical cyclones and seismic risks.
These pools signed a Memorandum of Understanding at COP27 to collaborate on product development, advocacy, and capacity building.
Microinsurance for Climate Resilience:29 Microinsurance extends risk coverage to low-income households in developing countries whose livelihoods are vulnerable to climate impacts. More than one billion unbanked adults live in the most climate-vulnerable countries, and they lack the financial resilience to withstand climate shocks.
Climate-linked index microinsurance products use satellite monitoring to trigger automatic payouts when drought, flood, or temperature indices reach predetermined levels, eliminating verification costs and fraud risks while providing rapid relief. Evidence suggests microinsurance helps vulnerable communities adopt risk management rather than harmful coping mechanisms after the events have happened, which then deepen poverty cycles.
Some microinsurance programs are now pairing parametric coverage against climate shocks with access to savings accounts or lines of credit accounts for post-disaster recovery. The idea is that this can strengthen community resilience.30
Nature-Based Solutions and Insurance Innovation:5 Insurers increasingly recognise ecosystems2 as protective infrastructure deserving of coverage. Mangrove forests, coastal wetlands, and coral reefs provide natural storm surge barriers, while urban green spaces reduce flood risk and heat stress.
Insurance products now protect these natural assets and enable nature-based solutions, understanding that ecosystem degradation directly increases insured losses, although less than 2%29 of international climate finance currently supports nature-based solutions for adaptation.
Instrument
What It Covers
How It Works
Who Uses It
Strengths
Challenges
Parametric Insurance
Weather extremes (rainfall, wind, drought, heat)
Policies pay out automatically if a set index (like rainfall, temperature) crosses a threshold—no need to prove physical loss
Farmers, governments, businesses in exposed areas, humanitarian agencies
Fast payouts, limited paperwork, works for hard-to-insure risks
May not match actual losses perfectly; needs reliable data
Traditional Insurance
Physical damage from weather/disaster
Payouts come after damage is verified, based on actual bills and assessments
Property owners, businesses, local governments
Familiar, covers wide loss types, can be customised
Slow response, costly verification, may not cover all gaps
Brings capital markets into disaster relief, diversifies risk
Complex setup, investors risk losing principal if disaster strikes
Risk Pooling
Weather or disaster risks across regions or countries
Multiple countries/areas join a pool to share risks; one area hit, all pay, but events rarely hit all at once
Small nations, regional groups, insurance agencies
Reduces premiums, helps small countries access coverage
Governance is tricky, payouts depend on group solidarity
Microinsurance
Small losses for low-income, vulnerable groups
Ultra-affordable coverage, often parametric, sometimes bundled with savings, delivered by NGOs/banks/mobile
Farmers, informal workers, small businesses in climate hotspots
Swift and simple, increases resilience, avoids deep poverty
Can be less comprehensive, difficult to scale, requires outreach
Nature-Based/Ecosystem Insurance
Mangroves, reefs, wetlands, green urban assets
Policies protect/capitalise the restoration/maintenance of natural infrastructure
Coastal cities, local governments, conservation groups, insurers
Reduces cost of disasters naturally, preserves biodiversity
Not yet widespread, requires monitoring and valuation of natural assets
Comparable explanations of the different climate-related insurance products
In conclusion
As climate change intensifies, traditional insurance models face unprecedented challenges. Historical weather data, which is the foundation of actuarial science, becomes less reliable when climate patterns shift fundamentally.26 Failure to manage climate risks exposes both buy and sell side firms to financial instability, reputational harm, and even legal action.
Financial institutions are adapting by increasingly adopting active risk management strategies that include scenario analysis, stress testing, enhanced data collection, and real-time monitoring of exposures to physical and transition risks, and by aligning governance structures, investing in climate modeling and reporting platforms, and embedding climate risk in all business decision layers including by setting climate-reduction targets, assessing financed emissions, and developing new risk-adjusted pricing and hedging strategies.
Four years ago, she was a middle order bat, and not doing all that well at it.1 Thankfully, head coach Matthew Mott and assistant coach Tim Coyle decided to give her a go as an opener in 2017-18, and maybe it was their belief in her that helped, because at the time the Australian team had eight players who opened for their respective WBBL teams.2
Alyssa after creating problems for India, as usual.7 📷: ESPN Cricinfo
So that’s 120 ODIs (3,303 runs at 97.90 strike rate), 162 T20Is (3,054 runs at 129.79 strike rate), and 10 Tests (489 runs).1
The statistical contrast between Healy’s middle-order years and her opening career comes packaged with multiple record breaking innings: In 2019, her unbeaten 148 (off 61) against Sri Lanka set the world record for the highest individual score in women’s T20Is.3 In the 2020–21 Women’s Big Bash League, Healy struck 111 off 52 balls for the Sydney Sixers against the Melbourne Stars, featuring 14 fours and four sixes, then an unbeaten 100 in a chase of 176 in 2022.4
Her record in ICC finals is mind boggling:
In the 2020 T20 World Cup final at the MCG, her 75 off 39 balls in front of 86,174 spectators was transformational for women’s cricket. The innings featured the fastest fifty in an ICC final by any player, male or female, achieved in just 30 balls with a strike rate of 192.30. This was the record across formats at the time, and she broke multiple Indians along the way for it- the record used to belong to Hardik Pandya before this display, and she scored the runs against us. Of course she did.5
But big players routinely do big things. She then made 170 off 138 balls against England broke Adam Gilchrist’s record for the highest individual score in any World Cup final.6 This was also her return to form and her first century as captain.
And now, Healy’s 142 off 107 balls against India in the ongoing World Cup created history as Australia achieved the highest successful chase in women’s ODI history at 331 runs. I’d ask why us, but really, it’s all her.7
She also holds the record for most dismissals by any wicketkeeper in T20I cricket, with 92 dismissals (42 catches and 50 stumpings, MS Dhoni has the most for men, 918). So far, she’s kept in 99 T20Is, the most for any cricketer, male or female.1
Indian cricket fans know world cup heart break a little too well, mostly thanks to Australians like Healy, so we can appreciate how freaking clutch she is. But it extends beyond her individual performances- she’s also a pretty impressive captain: 43 wins from 56 matches across formats at 78.18%. In ODIs specifically, she stands at 84.61% wins, with 22 victories from 27 matches.9 Under her leadership, Australia has maintained their status as cricket’s most dominant team, and now has an extraordinary winning record: 12 consecutive World Cup wins since 2022.9
Her genius and resilience has fundamentally changed Australia’s approach, which means she is shaping cricket itself. As usual, Alyssa Healy is the difference.
Asset: Any resource of economic value owned or controlled by an individual or entity, expected to provide future financial benefit.
Asset Class: Broad categories of assets that behave similarly, e.g., equities (stocks), fixed income (bonds), cash, real estate.
Asset Type: Specific forms within an asset class, e.g., large cap, small cap stocks within equity.
Portfolio: A collection of investments held by an individual or entity.
Portfolio Weight: The percentage each asset contributes to the total value of a portfolio.
Asset Allocation: The strategy for distributing investments among different asset classes for balancing risk and return.
Diversification: Investing in different assets to reduce overall portfolio risk.
Rebalancing: Adjusting asset proportions in a portfolio to maintain target allocation that had been decided at the time of deciding asset allocation.
Liquidity: How easily an asset can be converted to cash without affecting its price.
Risk: The chance an investment might lose money or underperform expectations.
Risk Tolerance: Willingness or ability to withstand investment losses or volatility.
Volatility: The degree and frequency of changes in prices of an asset.
Portfolio Risk: The uncertainty of the entire basket of investments losing value or performing below expectations.
Market Risk/ Systematic Risk: Risk due to economy-wide factors affecting all investments.
Credit Risk: Risk that bond issuers or borrowers may default.
Company-specific Risk/ Unsystematic Risk: Risk tied to individual companies or securities.
Downside Risk: The potential for an investment to lose value due to negative market conditions. This focuses only on the probability and quantity of losses rather than the probability of volatility of prices. ESG investing primarily provides downside protection rather than return enhancement.
Volatility: The degree of price fluctuation in either direction in an asset or portfolio over time.
Benchmark: A standard (often an index) for comparing investment performance (e.g., Nifty 50).
Tracking Error: The difference between a portfolio’s returns and the returns of the benchmark its tracking.
Capital Gain: Profit made from selling an asset for more than it’s cost.
Dividend: Payments made by companies to shareholders, usually from profits.
Compound Interest: Earning interest on initial investment plus prior earned interest—critical for long-term growth.
Net Asset Value (NAV): Value per share of mutual funds or ETFs, calculated as total assets minus liabilities divided by shares.
Bull Market / Bear Market: Extended period of rising (bull) or falling (bear) asset prices.
Yield/ Return: Income return on investments, such as interest or dividends.
Turnover: The rate at which securities are bought/sold in a portfolio; high turnover can mean higher costs.
Sharpe Ratio: Measures risk-adjusted return, penalising for volatility.
Portfolio Optimisation: Selecting the best mix of assets to maximise returns for a given risk.
Passive/Active Management: Passive strategies track a benchmark, active invest based on analysis, not constrained to an index.
Index: A selection of securities representing a market or sector, used for performance tracking and benchmarking.
Index Risk Characteristics: How much an index’s value fluctuates due to its components; calculated via weighted average of the securities’ price changes.
Portfolio Tilting: Adjusting portfolio weights to emphasise preferred features (like ESG leaders) while maintaining diversification.
ESG Ratings/Scores: Independent evaluations of companies’ ESG performance.
Materiality: How significantly issues affect a company’s business or financial outcomes.
Greenwashing: Misleading claims of sustainability or ESG compliance by firms, especially the G part.
Greenhushing: Deliberately under-reporting or not reporting genuine environmental action.
Stakeholder: All groups affected by company actions, such as shareholders, employees, customers, suppliers, communities.
Now onto ESG investing.
What ESG investing is a way to put money into companies while considering more than just their financial returns. The non financial factors considered are Environmental, Social, and Governance (ESG) aspects of the company.
Human rights, equality, equity, diversity, inclusion, human capital management, customer safety, customer satisfaction,
Corporate governance, executive compensation, board membership, whistleblower protection, corporate transparency, business ethics, shareholder compensation and rights, stakeholder engagement
Why ESG investing has evolved from a niche ethical consideration to a fundamental component of modern investment strategy due to the recognition that environmental, social, and governance factors pose material financial risks that can devastate companies when left unmanaged. The core imperative for ESG investing lies not in altruism but in financial reality: companies that fail to manage ESG risks face losses that can destroy shareholder value and damage their competitive position.
Mismanaged environmental risks can result in extensive fines, settlements and other costs, stock price collapse, CEO resignations, criminal investigations, and business model restructuring.
Examples: The Volkswagen emissions scandal: the company was charged over $30 billion in fines, settlements, and other costs after installing “defeat devices” in 11 million diesel vehicles to cheat on emissions tests.1 The misconduct triggered an immediate stock price collapse, forced resignations, sparked criminal investigations across multiple continents, and required the company to fundamentally restructure its entire business model toward electric vehicles.
The BP Deepwater Horizon oil spill resulted in $20.8 billion in environmental damage settlements, the largest in U.S. history, plus additional billions in cleanup costs, lost revenues, and operational disruptions.23 The environmental damages translated directly into financial losses through fishing industry shutdowns, tourism declines, and permanent ecosystem service losses valued at $17.2 billion.4
Social risks create equally devastating financial consequences when companies fail to maintain proper governance over workplace culture and employee treatment.
Examples: The Wells Fargo cross-selling scandal, where employees created 3.5 million fraudulent accounts without customer consent, resulted in $3.7 billion in settlements and fundamentally shattered the bank’s reputation for customer-centric service.5 The scandal emerged from toxic sales cultures that imposed impossible quotas on employees, leading to widespread fraud, customer harm, and eventual regulatory intervention.
In 2025, Google agreed to pay $50 million to settle a lawsuit alleging bias against Black employees.6 Simultaneously, the company paid an additional $28 million to settle claims that it favored white and Asian employees.7 Adding to Google’s social risk exposure, the company faced a separate $118 million gender discrimination settlement involving approximately 15,500 employees.8 These combined settlements totaling $196 million (50+28+118) reflect systematic failures in Google’s workplace culture and diversity management that created material financial liabilities.
While risk management drives the primary rationale for ESG investing, additional business benefits strengthen the investment case. Better risk management reduces costly scandals and regulatory penalties, improved stakeholder relationships enhance operational resilience, and ESG practices often drive operational efficiencies that reduce costs.
Investor demand increasingly favors ESG-compliant companies, with over 90% of younger investors showing interest in sustainable investing.9 ESG-focused institutional investments are projected to reach $33.9 trillion by 2026,10 while 89% of investors consider ESG when making investment decisions11. This demand translates into better access to capital and lower financing costs for companies with strong ESG credentials.
Regulatory momentum makes ESG compliance increasingly mandatory rather than voluntary. The European Union’s Corporate Sustainability Reporting Directive, India’s Business Responsibility and Sustainability Report framework, and similar regulations worldwide require comprehensive ESG disclosures and accountability. Companies failing to meet these requirements face market access restrictions, regulatory penalties, and competitive disadvantages.
Research demonstrates that ESG investing provides downside protection, especially during social or economic crises.12 During the COVID-19 pandemic, companies with robust ESG practices demonstrated greater financial resilience and risk management capabilities compared to conventional peers.12 This downside protection stems from ESG companies’ superior risk management, stakeholder relationships, and operational flexibility.
Climate-related weather events are expected to cost suppliers $1.3 trillion by 2026.13 Companies with strong environmental practices position themselves to avoid these costs through improved resilience, supply chain diversification, and proactive adaptation measures. This represents massive potential savings compared to companies that ignore environmental risks.
How ESG investment strategies provide multiple pathways for investors to align their portfolios with environmental, social, and governance principles while pursuing financial returns. Understanding these distinct approaches enables investors to select methods that best match their values, risk tolerance, and impact objectives.
Negative Screening (Exclusionary Screening) Negative screening represents the oldest and most straightforward ESG approach, systematically excluding companies or entire sectors that fail to meet specific ethical or sustainability criteria. This strategy originated in the 1970s with religious investors avoiding industries like tobacco, alcohol, gambling, and weapons manufacturing.1415
Modern negative screening has expanded significantly beyond traditional “sin stocks” to exclude companies with poor environmental records, human rights violations, or severe governance failures. For example, many European pension funds exclude companies involved in coal mining or controversial weapons, while Norway’s Government Pension Fund Global eliminates companies with severe environmental damage or human rights violations from its portfolio.
The screening criteria can range from broad sector exclusions to specific revenue thresholds, such as excluding companies that derive more than 10% of revenue from fossil fuel extraction. This approach allows investors to avoid supporting business activities that conflict with their values while maintaining diversification across other sectors.
Positive Screening (Best-in-Class Selection) Positive screening takes the opposite approach by actively seeking companies that demonstrate superior ESG performance within their respective industries. This “best-in-class” methodology allows investors to maintain sector exposure while favoring companies with the strongest sustainability credentials.
Unlike negative screening, positive screening doesn’t automatically exclude controversial sectors like oil and gas or mining. Instead, it identifies companies within these industries that show the best ESG practices, commitment to improvement, and transition strategies. For instance, an oil company might qualify if it demonstrates the lowest carbon intensity, strongest safety record, and most credible renewable energy transition plan in its peer group.
BlackRock, the world’s largest asset manager, exemplifies this approach by selecting companies with the highest ESG ratings in each sector for its ESG-focused funds. The Dow Jones Sustainability Indices follow similar principles, annually selecting the top 10% of companies in each sector based on ESG criteria.16
ESG Integration ESG integration systematically incorporates environmental, social, and governance factors into traditional investment analysis alongside financial metrics. Rather than simply screening companies in or out, this strategy uses ESG data to better understand risks, opportunities, and long-term value creation potential.
This approach recognises that ESG factors can significantly impact a company’s financial performance, competitive position, and operational resilience. Investment analysts examine how climate risks might affect a utility company’s infrastructure costs, how labor relations impact a retailer’s operational efficiency, or how board composition influences strategic decision-making quality.
Unilever demonstrates ESG integration through its Sustainable Living Plan, which focuses on environmental impact, social responsibility, and governance to reduce risk, build stakeholder trust, and deliver consistent financial performance.
Thematic Investing Thematic investing focuses on specific ESG themes or sectors that address major global challenges while offering growth opportunities. This strategy identifies long-term sustainable trends and invests in companies positioned to benefit from these developments.
Common thematic areas include renewable energy, clean technology, water management, sustainable agriculture, healthcare access, and financial inclusion. The iShares Global Clean Energy ETF exemplifies this approach by investing specifically in companies involved in solar, wind, and other renewable energy sources.
Thematic investing differs from broad ESG approaches by concentrating on specific solutions rather than applying general ESG criteria across all sectors. This focused approach can offer higher growth potential but typically involves greater concentration risk.
Impact Investing Impact investing seeks to generate measurable positive social or environmental outcomes alongside competitive financial returns. This approach targets specific problems and requires evidence of additionality- demonstrating that the investment creates positive change that wouldn’t occur otherwise. The Global Impact Investing Network reports that impact investing assets under management have grown to $1.6 trillion in 2024.1718
Impact investments often focus on underserved markets or pressing global challenges such as affordable healthcare, clean water access, financial inclusion, sustainable agriculture, and climate solutions. Examples include microfinance institutions serving underbanked populations, funds supporting affordable housing projects, and companies developing clean water solutions for developing regions. To be noted, unlike thematic investing, impact investing requires ongoing measurement and reporting of social and environmental outcomes, not just investment in relevant sectors.
Shareholder Engagement and Stewardship Shareholder engagement uses ownership rights to influence corporate behavior and improve ESG practices through dialogue, proxy voting, and shareholder resolutions. This strategy recognises that investors can create positive change by actively engaging with companies rather than simply avoiding or divesting from problematic investments.
Engagement activities include regular dialogue with management, filing shareholder proposals, voting on proxy measures, and participating in collaborative initiatives with other investors. BlackRock reported conducting over 2,600 engagements with nearly 1,700 companies during 2019, focusing on issues like board diversity and climate risk disclosure.19
A cinematic example of ESG shareholder activism occurred in 2021 when Engine No. 1, a small hedge fund with just $40 million invested, successfully elected three directors to ExxonMobil’s board to promote climate-focused strategies.20 This campaign demonstrated how strategic engagement can achieve significant influence even with modest shareholdings.
Norm-Based Screening Norm-based screening evaluates companies based on compliance with internationally recognised standards and norms covering ESG factors. This approach screens investments according to frameworks established by organisations such as the United Nations Global Compact, OECD Guidelines for Multinational Enterprises, and International Labour Organization conventions.
Unlike values-based exclusions, norm-based screening focuses on minimum acceptable business conduct standards rather than sector preferences. Companies failing to comply with basic human rights, labour standards, environmental protections, or anti-corruption measures may be excluded regardless of their industry.
EUROFIMA exemplifies this approach by monitoring investee compliance with the Ten Principles of the UN Global Compact, derived from international human rights, labour, environmental, and anti-corruption standards. Non-compliant positions must be liquidated and business relationships terminated.21
Portfolio Tilting and Overweighting Portfolio tilting adjusts portfolio weights to favour companies with higher ESG ratings while maintaining similar sector and risk characteristics to a benchmark index. This approach provides ESG exposure without dramatically altering portfolio diversification or risk profiles.
Rather than completely excluding companies or sectors, portfolio tilting reduces exposure to ESG laggards while increasing allocations to ESG leaders. A fund might replicate the Russell 3000 index structure but tilt toward companies with superior ESG scores, maintaining broad market exposure while expressing ESG preferences.
This strategy appeals to investors seeking ESG alignment without accepting significant tracking error relative to market benchmarks. The approach balances ESG considerations with traditional portfolio management objectives like diversification and risk control.
Double Materiality Double materiality is the cornerstone of the European Union’s Corporate Sustainability Reporting Directive (CSRD). Double materiality looks at the company’s impact on the environment, which is seen in impact materiality and sustainability issues influence a company’s development, performance, and financial position, which is evaluated through financial materiality.
Choosing the Right Strategy The selection of appropriate ESG strategies depends on individual investor priorities, risk tolerance, and desired level of impact. Many investors combine multiple approaches—using negative screening to exclude unacceptable investments while applying positive screening or ESG integration to select among remaining options.
Beginners often start with ESG mutual funds or ETFs that employ professional management and established methodologies. More sophisticated investors might combine thematic investments with shareholder engagement activities to maximise both financial returns and positive impact.
Who Pension funds have emerged as significant drivers of ESG investment due to their long-term investment horizons and exposure to ESG-related downside risks.22 According to recent research, 71% of sovereign wealth fund respondents have adopted an ESG approach,23 examples include Norway’s Government Pension Fund Global (GPFG), the world’s largest sovereign wealth fund at $1.3 trillion, which has become a stand-out example of responsible investing through negative screening and divestment from companies causing severe environmental damage.24 Insurance companies are the third influencial group interested in the ESG investing, with 85% of global insurers believing ESG will impact all functions of their business. They identify investments as the single largest area of ESG impact, with 91% recognising significant implications.25 Finally, asset management giants are the remaining very large investor: BlackRock now oversees roughly $320 billion of dedicated ESG funds,26 Vanguard offers both exclusionary ESG funds that filter out certain sectors and actively managed products that allocate capital to companies with leading or improving ESG practices,27 and State Street Global Advisors manages over $516 billion in ESG assets under management, comprising roughly 12.5% of the firm’s total assets under management as of 2021.28
Current ESG Related Monetary Flows The ESG fund flow landscape has experienced significant volatility in recent years. Global sustainable funds recorded the highest inflows of 2024 in the fourth quarter, reaching $16.0 billion. However, the first quarter of 2025 saw record outflows of $8.6 billion, marking the worst quarter on record.2930 The market showed signs of recovery in the second quarter of 2025 with net inflows of $4.9 billion, driven primarily by European investors who contributed $8.6 billion after redeeming $7.3 billion in the prior quarter.31
Global sustainable funds attracted $31 billion in net inflows during 2024, though this represented slower growth compared to previous years. The combined assets of mutual funds and ETFs investing according to ESG criteria increased by $8.43 billion to $605.23 billion in the United States alone.3233
Meanwhile, Germany leads global ESG enforcement with the largest single penalty imposed on DWS (Deutsche Bank’s asset management arm), which paid €25 million ($27 million USD) in 2025 for greenwashing violations;34 Australia has also demonstrated a comprehensive enforcement program with three major greenwashing penalties totaling $23.3 million USD in the last year;353637 United Kingdom reports £7.3 million ($7.3 million USD) in individual penalties during 2024/25, representing a 225% increase from the previous year;38 and even the United States has fined $19 million across multiple actions.3940
Challenges and Market Evolution
The ESG landscape faces significant challenges from regulatory uncertainty and political backlash, particularly in the United States where ESG principles have become politically controversial.41
The absence of unified global ESG standards represents one of the most persistent challenges facing the sector. 25% of global investors identify inconsistency in ESG scores from different rating providers as their primary challenge, while 37% of executives highlight the lack of consistent reporting standards as a major operational obstacle.42 This fragmentation creates significant compliance burdens for multinational corporations. Companies operating across multiple jurisdictions must navigate the CSRD, TCFD, GRI, SASB, and ISSB standards, each with different disclosure requirements.
Columbia University and London School of Economics research comparing 147 ESG fund portfolios with 2,428 non-ESG portfolios found that companies in ESG portfolios had worse compliance records for both labor and environmental rules. These findings contribute to growing skepticism, with 53% of UK investors considering ESG factors in 2023, down from 65% in 2021.4344
46% of investors highlight the lack of comprehensive ESG data as a significant challenge , particularly for Scope 3 emissions and supply chain risk assessments.4546
Supply chain due diligence presents major compliance challenges, as most ESG risks occur outside an organisation’s direct operations. Companies must ensure their entire supply chain complies with ESG standards, which can be resource-intensive, particularly when dealing with suppliers in emerging markets that may lack resources or expertise to meet compliance standards.47
There is a growing role of artificial intelligence and machine learning in ESG data collection and analysis. Technology solutions address the 46% of investors who identify lack of comprehensive ESG data as a significant challenge, representing a practical solution to implementation barriers.
In conclusion, understanding these diverse ESG investment strategies enables investors to construct portfolios that reflect their values while pursuing competitive financial returns and contributing to positive environmental, social, and/ or corporate governance changes, if they wish to do so.
ESG factors represent material business risks that directly impact financial performance, not ancillary social concerns: NYU Stern meta-analysis showing 58% positive relationships and 90% non-negative correlations between ESG performance and financial returns.48 This positions ESG as fundamental risk management rather than values-based investing overlay. Therefore, companies that excel at managing these risks demonstrate superior long-term value creation, while those that ignore ESG factors face potentially catastrophic financial losses that can destroy decades of shareholder value.
India has had many reliable cricketers, but rarely someone so… Reliably lethal.
Jasprit Bumrah. 📷 A screenshot from @jaspritb1 on Instagram.
There are so many things to love about the man. The Magnus Effect caused by his whipping arm that makes his deliveries sing through the air,12 swinging either side of the batter. His ability to bowl nearly 43%34 of his deliveries on a good line and length while targeting the stumps more frequently than any other bowler at his pace. The proficiency at all stages of the game. His format agnosticism. The brain behind it all.
But really, it’s his undeniable dependability that gets me.
Bumrah’s transcendent 2024 season, where he finished as the world’s leading Test wicket-taker with 71 wickets in just 13 matches at 30.1,567 was nevertheless crowned by the sheer inevitability of his match-turning six runs in two overs against South Africa in the T20 World Cup Final, when all South Africa needed were 30 runs from 30 balls.89
In 2024, he was the best bowler in all formats at the same time.10 In 2025, he’s working to return from the injuries that caused him. And yet. Even at 90–95 (93?)% of peak velocity, Bumrah’s toolkit remains anti-fragile. Seam, angle, release deception, and decision-late variation age well.
There are great fast bowlers whose brilliance feels like lightning. Bumrah feels like sunrise. The thrill is not surprise but assurance. A captain turns to him and the fan breathes differently. He does not hunt for miracles: he manufactures them, over by over, on any surface, in any light. And like the Sun, he’ll rise again soon.
Chasing Tales 
