Illiquid impact illustration from Pixabay by Kohji Asakawa
11x new research on green/brown ideology, tax pollution, solar risks, brown sovereign risk, green backtest risk, green supplier engagement, greening M&A, biodiversity startups, impact private equity, liquid impact, SDG revenues (# shows the number of SSRN full paper downloads as of April 3rd, 2025)
Ecological Research
Green/brown ideology: Public Support for Environmental Regulation: When Ideology Trumps Knowledge by Markus Dertwinkel-Kalt and Max R. P. Grossmann as of April 1st, 2025 (#8) “When environmental regulations are unpopular, policymakers often attribute resistance to information frictions and poor communication. We test this idea in the context of a major climate policy: Germany’s Heating Law of 2023, which mandates the phase-out of fossil fuel heating. … Despite successfully increasing factual knowledge, information provision has no significant effect on intended technology adoption, policy support, or incentivized measures of climate preferences. Instead, pre-existing environmental preferences and demographic characteristics emerge as the key predictors of responses to the regulation. A feeling that existing systems still work well and cost considerations dominate fossil fuel users’ stated reasons for non-adoption, while independence from fossil fuels and perceived contributions to the common good drive adoption among switchers. Our findings suggest that opposition to climate policy stems from fundamental preference heterogeneity rather than information frictions“ (abstract).
Tax pollution: Dirty Taxes: Corporate Taxes and Air Pollution by …. Thilo Erbertseder, Martin Jacob, Constance Kehne, and Hannes Taubenböck as of March 11th, 2025 (#128): “… We use satellite data on nitrogen dioxide (NO2) levels and exploit local business tax variation in Germany over 2008-2020. We find that a 1% tax increase leads to 0.15% higher NO2 levels. … This increase in pollution can be explained by higher taxes preventing firms from shifting towards cleaner assets“ (abstract).
Sustainable investment research (in: Illiquid impact)
Solar risks: Solar Flare Up: Systemic Organizational Risk in the Residential Solar Industry by David F. Larcker and Brian Tayan as of Dec. 3rd, 2024 (#87): “… A systemic risk is one in which the system itself — through its incentives, structure, and culture — encourages or fails to detect behavior contrary to what is intended by those who developed or manage the system. To illustrate the potential for systemic organizational risk to arise, we consider the curious case of the residential solar industry, in which complex financing, generous tax credits, generous sales commissions, and uncertain costs — coupled with widespread public interest in the adoption of solar — have combined to create an incredibly complex industry with multiple points of potential breakdown” (abstract) … iSun, a publicly traded solar company based in Vermont, has been accused of misappropriating funds; the company went bankrupt in 2024 and delisted from the NASDAQ. One firm estimates that as many as 75 percent of solar companies in California face bankruptcy because of the state’s revision of net-metering rules. Major publicly traded companies, such as Sunrun and Sunnova, have seen their stock prices fall in excess of 80 percent from their peak. Recently, the external auditor for SunPower resigned because the company did not have the “internal controls necessary to develop reliable financial statements” and therefore it was “unwilling to be associated with the financial statements prepared by management.” The company subsequently declared bankruptcy“ (p. 5). My comment: See Neues Research: Systemische Risiken von Solarinvestments | CAPinside
Brown sovereign risk: Creditworthy: do climate change risks matter for sovereign credit ratings? By Lorenzo Cappiello, Gianluigi Ferrucci, Angela Maddaloni, and Veronica Veggente from the European Central Bank as of March 26th, 2025 (#32): “… higher temperature anomalies and more frequent natural disasters—key indicators of physical risk—are associated with lower credit ratings. In contrast, transition risk factors do not appear to be systematically integrated into credit ratings throughout the entire sample period. … Additionally, more ambitious CO2 emission reduction targets and actual reductions in CO2 emission intensities are associated with higher ratings post-Paris Agreement, … countries with high levels of debt and those heavily reliant on fossil fuel revenues tend to receive lower ratings after the Paris Agreement …“ (abstract). My comment: I use bonds of multilateral development banks instead of sovereign bonds for my portfolios.
Green backtest risk: Performance of sustainable indices: Are there differences between pre- and post-inception by Niklas Kestler and Hendrik Scholz as of April 1st, 2025 (#14) “… this paper conducts a comprehensive analysis of 141 sustainable indices … There is evidence that the pre-inception period seems to perform better than the post-inception period. This is especially visible for Smart-Beta-ESG and Thematic-ESG indices. … Moreover, we find some indication of outperformance for Broad-ESG indices“ (p. 13/14). My comment: Since many years, I do not use backtests anymore
Green supplier engagement: Climate Disclosures and Decarbonization along the Supply Chain by Pietro Bonetti, Yang (Ellen) En, Igor Kadach, and Gaizka Ormazabal as of Dec. 26th, 2024 (#338): „… Our … exploit the unique features of the CDP, the world-leading platform of corporate climate risk disclosures. We find a strong positive association between customer and supplier disclosures to the CDP. … We also observe that supplier CDP disclosures likely induced by customers’ demand are associated with subsequent lower carbon emissions. Moreover, customers are more (less) likely to terminate relationships with the most (least) polluting suppliers and with those not meeting their disclosure demands”. My comment: With my shareholder engagement I ask to publish GHG Scope 3 emissions (including suppliers) and I also ask for independent ESG-Scoring of all significant suppliers (which typically prominently include GHG-effects), see Shareholder engagement: 21 science based theses and an action plan
Greening M&A: Environmental Disclosure, Regulatory Pressure, and Sustainable Investment: Evidence from Mergers and Acquisitions by Kee-Hong Bae, Hamdi Driss, and Nan Xiong as of April 1st, 2025 (#1): “We investigate how environmental disclosure regulations influence firms’ mergers and acquisitions. Leveraging the staggered adoption of 26 environmental disclosure mandates across the globe as shocks that pressure companies to improve their environmental performance, we find that 1) acquirers increasingly target firms with better environmental performance following the mandates, 2) these acquirers realize positive short-term and long-term abnormal stock returns, and 3) they achieve substantial reductions in greenhouse gas emissions and environmental damage costs post-acquisition” (abstract). My comment: This speaks against the often-used hypothesis, that public companies sell brown businesses to private companies which may not care much about environmental issues.
Biodiversity startups: Biodiversity Entrepreneurship by Sean Cao, G. Andrew Karolyi, William W. Xiong, and Hui Xu as of March 31st, 2025 (#14) “… we identify 630 biodiversity-linked start-ups in PitchBook and compare their financing dynamics to other ventures. We find biodiversity start-ups raise less capital but attract a broader coalition of investors, including … mission-aligned impact funds and public institutions (“values-driven investors”). Values investors provide incremental capital rather than substituting value investors, but funding gaps persist. …” (abstract).
Illiquid impact: Impact Investing and Worker Outcomes by Josh Lerner, Markus Lithell, and Gordon M. Phillips as of March 26th, 2025 (#199): “… Consistent with earlier studies, impact investors are more likely than other private equity firms to fund businesses in economically disadvantaged areas, and the performance of these companies lags behind those held by traditional private investors. We show that post funding impact-backed firms are more likely to hire minorities, unskilled workers, and individuals with lower historical earnings, perhaps reflecting the higher representation of minorities in top positions. They also allocate wage increases more favorably to minorities and rank-and-file workers than VC-backed firms“ (abstract).
SDG-Revenues: ESG rating providers: Survey on impact ratings by the DVFA Sustainability Committee as of April 1st, 2025: „Impact ratings are often the basis for calculating the proportion of sustainable investments in investment funds. …10 of the 18 rating providers surveyed answered our questions about their impact ratings in the period from September to November 2024. … The participants in the survey have a combined market share of up to 90% for sustainability data and ratings … The approach of the various rating providers shows, in addition to a large number of similarities, some significant differences…. almost all providers use the UN Sustainable Development Goals (SDGs) as the basis for their rating system … It turns out that almost all providers place a strong focus on the impact of a company’s products and services. The impact is often quantified on the basis of sales data. … Three providers determine impact purely on a company basis and three providers purely on an activity basis. A further three calculate both company and activity-based impact. This reflects the DVFA’s impression that neither investors nor regulators have developed a uniform standard for measuring sustainable investments. …“ My comment: I am a member of the DVFA Sustainability Committee (Translated with the free version of DeepL.com)
German impact research studies (in: Illiquid impact)
SDG-Umsätze: ESG-Ratinganbieter: Befragung zu Impact-Ratings vom DVFA-Fachausschuss Sustainability vom 1. April 2025: „Impact-Ratings sind oftmals die Grundlage zur Berechnung des Anteils nachhaltiger Investitionen in In vestmentfonds. …10 der 18 befragen Ratinganbieter beantworteten im Zeitraum von September bis November 2024 unsere Fragen zu ihren Impact-Ratings. … Die Teilnehmer der Umfrage haben gemeinsam einen Marktanteil bei Nachhaltigkeitsdaten und -ratings von bis zu 90 % … Die Vorgehensweise der verschiedenen Ratinganbieter zeigt, neben einer Vielzahl von Gemeinsamkeiten, einige wesentliche Unterschiede…. nahezu alle Anbieter nutzen die UN Sustainable Development Goals (SDGs) als Grundlage für ihr Bewertungssystem … Es zeigt sich, dass fast alle Anbieter einen starken Fokus auf die Wirkung der Produkte und Dienstleistungen eines Unternehmens legen. Dabei wird die Wirkung oft anhand von Umsatzdaten quantifiziert. … Drei Anbieter ermitteln Impact rein unternehmensbasiert und drei Anbieter rein aktivitätsbasiert. Weitere drei ermitteln gleichermaßen unternehmens- und aktivitätsbasiert. Das spiegelt den Eindruck der DVFA wider, dass weder bei Investoren noch bei Regulierern ein einheitlicher Standard zur Messung der nachhaltigen Investitionen entwickelt hat. …“ Mein Kommentar: Ich bin Mitglied des DVFA Fachausschusses Sustainability. Mein Ansatz siehe auch SDG-Umsätze: Die wichtigste Nachhaltigkeitskennzahl
Liquid impact: Wirkungen der nachhaltigen Kapitalanlage von Rolf Häßler von NKI Research vom März 2025: „… Ergebnisse der Befragung der größten börsennotierten Unternehmen im deutschsprachigen Raum … 41,9 % der befragten Unternehmen stellen fest, dass die Anforderungen der nachhaltigen Kapitalmarktakteure einen sehr oder eher großen Einfluss auf ihre Gesamtstrategie haben – Tendenz steigend. Noch höher ist dieser Einfluss mit Blick auf Ziele und Strategie im ESG-Management (58,1 %) und die konkreten Maßnahmen (67,8 %). Im Hinblick auf den Einfluss der verschiedenen ESG-Anlagestrategien bewerten die Unternehmen die beiden Dialogstrategien als besonders einflussreich“ (S. 3). My comment: Impact is possible even with exchange-listed investments (for my shareholder engagement activities see e.g. My shareholder engagement: Failures, successes and adaption)
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Werbung (in: Illiquid impact)
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Der Fonds konzentriert sich auf die UN-Ziele für nachhaltige Entwicklung mit durchschnittlich einzigartig hohen 99% SDG-vereinbaren Umsätzen der Portfoliounternehmen und sehr hohen E-, S- und G-Best-in-Universe-Scores sowie einem besonders umfangreichen Aktionärsengagement bei 29 von 30 Unternehmen (siehe auch My fund).
Zum Vergleich: Ein traditioneller globaler Small-Cap-ETF hat eine SDG-Umsatzvereinbarkeit von 5 %, ein diversifizierter Gesundheits-ETF 14 %, Artikel 9 Fonds 21%, liquide Impactfonds 39% und ein ETF für erneuerbare Energien 43 % (vgl. Hohe SDG Umsätze? Nur wenige Investmentfonds!).
Insgesamt hat der von mir beratene Fonds seit der Auflage im August 2021 eine ähnliche Performance wie traditionelle globale Small- und Mid-Cap-Fonds (vgl. z.B. Fonds-Portfolio: Mein Fonds | CAPinside und Globale Small-Caps: Faire Benchmark für meinen Artikel 9 Fonds?).
Ein Fondsinvestment war also bisher ein „Free Lunch“ in Bezug auf Nachhaltigkeit: Ein besonders konsequent nachhaltiges Portfolio mit marktüblichen Renditen und (eher niedrigeren) Risiken. Vergangene Performance ist allerdings kein guter Indikator für künftige Performance.