Archiv der Kategorie: Responsible Investment

Microfinance risk and more: Researchposting #107

Microfinance risk: 15x new research on publication biases, green innovation, supply chains, biocredits, greenium, ESG ratings and loans, CSR, Kickbacks etc. by Karol Kemper, Ulf Moslener, Nic Schaub, Simon Straumann, Pınar Yeşin et al.

Ecological and social research

Misleading research: Footprint of publication selection bias on meta-analysis in medicine, economics, and psychology by František Bartoš et al as of August 25^th, 2022: “… we survey over 26,000 meta-analyses containing more than 800,000 effect size estimates from medicine, economics, and psychology …. The median probability of the presence of an effect in economics decreased from 99.9% to 29.7% after adjusting for publication selection bias. This reduction was slightly lower in psychology (98.9% −→ 55.7%) and considerably lower in medicine (38.0% −→ 27.5%)” (abstract). My comment: There is always bias in research, with my approach, too, but is important to disclose it: 100 research blogposts since 2018 – Responsible Investment Research Blog (prof-soehnholz.com)

Brown innovations: Toxic Emissions and Corporate Green Innovation by Wenquan Li, Suman Neupane, and Kelvin Jui Keng Tan as of Oct. 23^rd, 2022 (#264): “Consistent with our main hypothesis, which hinges upon regulatory burden and environmental awareness, we show that high-emission companies produce more green patents of higher quality and value than low-emission firms. … We also find that environmental related green patents mitigate future toxic air releases“ (abstract). My question: Is internal financing sufficient or external capital required to finance these innovations?

Advert for German investors: “Sponsor” my research by recommending my Article 9 fund. The minimum investment is approx. EUR 50 and return and risks are relatively good: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T: I focus on social SDGs and midcaps and use best-in-universe as well as separate E, S and G minimum ratings.

Please go to page 2 (# indicates the number of SSRN downloads on December 7th):

Seiten: 1 2

Green research deficits: Researchblogposting #106

Green research: 15x new research on net-zero, healthcare, banking, m&a, ESG, voting, retail investors, private equity etc. by Sandra Nolte, Harald Lohre, Martin Oehmke, Marcus Opp et al.

Social and green research

Climate demographics: The Slow Demographic Transition in Regions Vulnerable to Climate Change by Thang Dao, Matthias Kalkuhl, and Chrysovalantis Vasilakis as of October 21^st, 2022 (#7): “We consider how the demographic transition has been shaped in regions that are the least developed and the most vulnerable to climate change. Environmental conditions affect intra-household labor allocation because of the impacts on local resources under the poor infrastructural system. Climate change causes damage to local resources, offsetting the role of technological progress in saving time that women spend on their housework. Hence, the gender inequality in education/income is upheld, delaying declines in fertility and creating population momentum. The bigger population, in turn, degrades local resources through expanded production. The interplay between local resources, gender inequality, and population, under the persistent effect of climate change, may thus generate a slow demographic transition and stagnation. We provide empirical confirmation for our theoretical predictions from 44 Sub-Saharan African countries” (abstract).

Net zero challenges: Neutralizing the Atmosphere by Shelley Welton as of May 5^th, 2022 (#151): “Net zero” has rapidly become the new organizing paradigm of climate change law. … To date, critiques have centered on what this Article terms “accounting” risks: that is, risks that pledges in action will fail to live up to pledges on paper. The Article argues that there are two broader normative risks with net zero that are underdiagnosed but may prove more intractable. First, the net zero framework presumes collective disinterest regarding the best way to neutralize atmospheric emissions, with every participating entity left to determine its own preferred strategy. In reality, decisions around how to reach net zero emissions are contested, impactful, and often politically explosive. … The second risk this Article identifies is the “collective achievement challenge”: if the world continues to pursue an atomized approach to net zero, it is likely that entities will over-rely on certain cost-effective strategies—like tree planting—at scales that cannot be collectively achieved, at least not without substantial collateral social consequences. Disjunctive efforts toward net zero thus threaten to undermine the legal, political, and physical foundations of the global project” (abstract).

Advert for German investors: “Sponsor” my research by recommending my Article 9 fund. The minimum investment is approx. EUR 50 and so far return and risks are relatively good: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T: I focus on social SDGs and midcaps and use best-in-universe as well as separate E, S and G minimum ratings.

Please go to page 2 (# indicates the number of SSRN downloads on November 30st):

Seiten: 1 2

Engagement test (Blogposting #300)

The background

Engagement test: I am skeptical regarding the effectiveness of shareholder voting and engagements (compare Divestments bewirken mehr als Stimmrechtsausübungen oder Engagement | SpringerLink and Impact Investing mit Voting und Engagement? (Opinionpost #194) – Responsible Investment Research Blog (prof-soehnholz.com).

Nevertheless, I wanted to try an engagement myself. The starting point was a call with a Linkedin contact in April 2022. He mentioned a German engagement startup and introduced me to its founder, David Hamel. David and I talked on May 3^rd, 2022 and David suggested to review the portfolio of my investment fund (FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T) for engagement opportunities.

My fund

For my fund, I select 30 stocks globally almost only according to sustainability criteria. I use strict activity and country exclusions and high requirements for environmental, social and governance (ESG) best-in-universe ratings. This means that I do not look for the best ecological, social and governance ratings in pre-defined industries (best-in-class approach), but for the best ESG rated stocks globally across all industries. In addition, I try to include only companies which are best aligned with one or more of the Sustainable Development Goals of the United Nations (SDG).

More focused and therefore often smaller companies can have a better fit with my approach than diversified companies. Unsurprisingly, the median capitalization of the stocks in my portfolio is only slightly higher than 10 billion USD, meaning that a significant part of my stocks are so-called small- or midcaps.

The targets and topics of my engagement test

David’s startup, DeRisk.earth, tries to identify existing engagements as well as potential new engagement topics for stock listed companies worldwide. When I sent David my portfolio, he found no current engagements on any of the stocks by major activists or asset managers. That was to be expected, though, since statistics from MSCI show that for more than 70% of the almost 9000 Stocks in the MSCI ACW IMI Index there are no known active engagements of large asset managers (Net-Zero Alignment: Engaging on Climate Change – MSCI). Also, I try to select the best stocks according to environmental, social and governance ratings. Therefore I did not expect to find many engagements for my portfolio companies.

Comparing different data sources, all of the stocks in my portfolio showed good ESG scores. Nevertheless, David recommended to start an engagement with an US water utility and infrastructure company to try to even further improve that company. The reason for this recommendation was that the company was subject to litigation claims due to a chemicals spill.

My subsequent own analysis of that company made me suggest CO2 improvement, too, and in addition the use of ESG criteria for supplier selection and a supplier ESG improvement program.

The first contacts

On May 30st, we wrote our first Email to the head of investor relations of American Water Works (Amwater) with our suggestions. I mentioned that through the German mutual fund which I advise I only held shares of approximately three hundred thousand US Dollars.

Three weeks later, we received an answer and started an exchange of Emails. To support our proposals we referred to two research studies: Do Scope 3 Carbon Emissions Impact Firms’ Cost of Debt? by Ahyan Panjwani, Lionel Melin, and Benoit Mercereau as of Oct. 17^th, 2022 and Making supply-chain decarbonization happen | McKinsey).

Amwater informed us that the learnings from the chemical spill as well as employee education topics were already covered by their Environmental Policy and their educational activities for employees. Therefore, we focused on other points and made our proposal regarding CO2 emissions more concrete. We specifically asked for “clear GHG emission targets, including separately disclosed scope 1, 2 and 3 emissions and their alignment with the Paris Agreement” and “comprehensive ESG-evaluation … of all major suppliers and clear minimum ESG-standards for new suppliers and for retention of existing suppliers”.

First results of my engagement test

On October 31st, Amwater publicly announced new targets: “By 2035, reduce absolute scope 1 and scope 2 emissions by 50% (2020 baseline). Achieve net zero scope 1 and scope 2 emissions by 2050. First time disclosure of scope 3 emissions”.

On November 9^th, we had a videocall with two investor relations representatives, one of them focusing on ESG matters. In this call, we repeated our suggestion to set concrete scope 3 reduction goals. We also proposed to use water companies and not utilities overall as benchmarks. In addition, we suggested improved supplier codes of conduct, ESG evaluations especially for CO2-critical suppliers for fuels, energy and capital goods and supplier ESG audits. We further exchanged views on topics such as ESG- and climate data and data providers and greenwashing risks. We also agreed to continue our discussions.

Engagement test conclusion

It is very likely that Amwater would have made these public announcements without our input. On the positive side, the direct exchange of information and opinion potentially helped us and perhaps also the company to better understand obstacles towards more sustainability.

In general, shareholder engagement can only focus on a very select number of topics out of the many, which could be improved by almost all companies. And to measure the effects of engagements and the attribution to any one investor seems to be very difficult.

It is probably much more effective to hope that (the leaders of) companies are intrinsically motivated to significantly improve their sustainability. Engagement can very likely be much more effective with such companies than with ESG-skeptics. Also, strict regulation for all market participants may lead to more sustainability. Nevertheless, this case encouraged me to continue testing further engagements.

Disclaimer

Diese Unterlage ist von Soehnholz Asset Management GmbH erstellt worden. Die Erstellerin übernimmt keine Gewähr für die Richtigkeit, Vollständigkeit und/oder Aktualität der zur Verfügung gestellten Inhalte. Die Informationen unterliegen deutschem Recht und richten sich ausschließlich an Investoren, die ihren Wohnsitz in Deutschland haben. Sie sind nicht als Verkaufsangebot oder Aufforderung zur Abgabe eines Kauf- oder Zeichnungsangebots für Anteile des in dieser Unterlage dargestellten Fonds zu verstehen und ersetzen nicht eine anleger- und anlagegerechte Beratung. Anlageentscheidungen sollten nur auf der Grundlage der aktuellen gesetzlichen Verkaufsunterlagen (Wesentliche Anlegerinformationen, Verkaufsprospekt und – sofern verfügbar – Jahres- und Halbjahresbericht) getroffen werden, die auch die allein maßgeblichen Anlagebedingungen enthalten. Die Verkaufsunterlagen werden bei der Kapitalverwaltungsgesellschaft (Monega Kapitalanlagegesellschaft mbH), der Verwahrstelle (Kreissparkasse Köln) und den Vertriebspartnern zur kostenlosen Ausgabe bereitgehalten. Die Verkaufsunterlagen sind zudem im Internet unter www.monega.de erhältlich. Die in dieser Unterlage zur Verfügung gestellten Inhalte dienen lediglich der allgemeinen Information und stellen keine Beratung oder sonstige Empfehlung dar. Die Kapitalanlage ist stets mit Risiken verbunden und kann zum Verlust des eingesetzten Kapitals führen. Vor einer etwaigen Anlageentscheidung sollten Sie eingehend prüfen, ob die Anlage für Ihre individuelle Situation und Ihre persönlichen Ziele geeignet ist. Diese Unterlage enthält ggf. Informationen, die aus öffentlichen Quellen stammen, die die Erstellerin für verlässlich hält. Die Erstellerin übernimmt keine Gewähr oder Garantie für die Richtigkeit und/oder Vollständigkeit dieser Informationen. Die dargestellten Inhalte, insbesondere die Darstellung von Strategien sowie deren Chancen und Risiken, können sich im Zeitverlauf ändern. Einschätzungen und Bewertungen reflektieren die Meinung der Erstellerin zum Zeitpunkt der Erstellung und können sich jederzeit ändern. Es ist nicht beabsichtigt, diese Unterlage laufend oder überhaupt zu aktualisieren. Sie stellt nur eine unverbindliche Momentaufnahme dar.

Smart women: Researchblogposting #105

Smart women: 16x new research on populism, immigration, children, progress, renewables, CCUS, purpose, fossil fuels, green bonds and loans, social premium, resilience, sustainability preferences, and crowdfunding by Holger Spamann, Dorothea Schäfer, Andreas Stephan, Zacharias Sautner et al.

Social research: Smart Women

Smarter women (1): Income Misperception and Populism by Thilo N. H. Albers, Felix Kersting, and Fabian Kosse as of November 16^th, 2022 (#13): “Based on a representative sample of German households, we find that individuals with pessimistic beliefs about their own income position have more right-wing populist attitudes. …. Men are more likely to translate dissatisfaction resulting from income misperception into populist attitudes than women. Our findings show that misperception strongly matters for populist attitudes, also in comparison to the objective income position. … policymakers … could improve citizens’ information about the households’ respective relative income position. … unintended consequences could occur. For example, the radical Norwegian approach towards transparency—one could query the income of every citizen online—decreased happiness among the poor (Perez-Truglia 2020)“ (p. 15).

Old anti-immigrants? No Country for Young People? The Rise of Anti-Immigration Politics in Ageing Societies by Valerio Dotti as of Oct. 7^th, 2022 (#3): “… population ageing and rising income inequality increase the political pressure to restrict the inflow of immigrant workers and inflate the size of government. … We show that ageing and rising inequality can help explain the success of anti-immigration politicians and parties in recent years. … the tightening of immigration policy induced by population ageing and rising inequality is generally harmful, though the harm is most severe for young people and future generations” (p. 44).

Climate demographics: Are Environmental Concerns Deterring People from Having Children? by Ben Lockwood, Nattavudh Powdthavee, and Andrew J. Oswald as of Oct. 11^th, 2022 (#13): „Our study … follows through time a random sample of thousands of initially childless men and women in the UK. Those individuals who are committed to a green lifestyle are found to be less likely to go on to have offspring. Later analysis adjusts statistically for a large set of potential confounders, including age, education, marital status, mental health, life satisfaction, optimism, and physical health. … a person entirely unconcerned about environmental behaviour is found to be approximately 60% more likely to go on to have a child when compared to a deeply committed environment” (abstract).

Advert for German investors: “Sponsor” my research e.g. by buying my Article 9 fund. The minimum investment is approx. EUR 50 and so far return and risks are relatively good: FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T: I focus on social SDGs and midcaps and use best-in-universe as well as separate E, S and G minimum ratings.

Please go to page 2 (# indicates the number of SSRN downloads on November 22nd):

Seiten: 1 2

Trustee or steward? Researchblogposting 104

Trustee or steward? 13x new research on climate tech and finance, interest rates, plant-based food, greenwashing, reporting, engagement, benchmarks, age, PFOF, and private equity by Richard Ennis at al.

Social and ecological research: Trustee or steward?

Climate tech advantage: Empirically grounded technology forecasts and the energy transition Rupert Way, Matthew C. Ives, Penny Mealy, and J. Doyne Farmer as of Sept. 21^st, 2022: “Most energy-economy models have historically underestimated deployment rates for renewable energy technologies and overestimated their costs. … Here, we use an approach based on probabilistic cost forecasting methods that have been statistically validated by backtesting on more than 50 technologies. … Compared to continuing with a fossil fuel-based system, a rapid green energy transition will likely result in overall net savings of many trillions of dollars—even without accounting for climate damages or co-benefits of climate policy” (p. 1).

Climate interest risk: The effects of climate change on the natural rate of interest: a critical survey by Francesco Paolo Mongelli, Wolfgang Pointner, and Jan Willem van den End as of Nov. 1^st, 2022 (#37): “This survey is the first to systematically review the possible effects of climate change on the natural rate of interest. While r* is a theoretical concept, it is used as a benchmark by central banks to assess the stance of their monetary policy and the room for policy manoeuvre. … In most cases, we find that climate change would have a rather dampening effect on r*, which implies a narrower room for manoeuvre for central banks. … the uncertain impact of climate change on main r* may call for an increasing flexibility in the monetary policy strategy, both in terms of objectives and time horizon. …. An orderly transition will mitigate the economic and financial risks of climate change and thereby also prevent potential downward effects on r*. In addition, active fiscal policies to mitigate climate change might also spur investment demand and thereby put upward pressure on the natural rate” (p. 26/27).

Please go to page 2 (# indicates the number of SSRN downloads on November 15th):

Seiten: 1 2

German ESG criticism: Researchposting 103

German ESG criticism: 14x new research on climate costs, circular economy, infrastructure, ESG, SDG, ratings, transitions, asset allocation, factor investing, REITs and private equity by Elizabeth Pollman, Bernd Scherer, Michael Grote et al.

Social and ecological research

Huge climate costs: The Global Costs of Extreme Weather That Are Attributable to Climate Change by Rebecca Newman and Ilan Noy as of Nov. 3^rd, 2022 (#13): “Extreme Event Attribution (EEA), a methodology that examines the degree to which anthropogenic greenhouse gas emissions had changed the occurrence of specific extreme weather events … We find that US$ 143 billion per year, of the costs of extreme events during the last twenty years, is attributable to anthropogenic climatic change. … other approaches use macroeconomic modelling embedded within climate models in various types of Integrated Assessment Models (IAM). … evidence that suggests that most IAMs are substantially under-estimating the current economic costs of climate change“ (abstract).

Circular Economy segmentation: Startups and Circular Economy Strategies: Profile Differences, Barriers and Enablers by Wim Van Opstal and Lize Borms as of October 18^th, 2022 (#27): “In this paper we presented results from the first survey on circular startups that allows for multivariate statistical analyses … business-to-business and business-to-government markets can be considered as frontrunner markets for circular business models and supporting services for the circular economy. Circular startups mostly consider sustainability and circularity as a comparative advantage, while activities like maintenance and repair, and sharing production means are less often explicitly considered as circular economy activities. … Barriers and enablers vary significantly depending on the circular strategies that are applied …“ (p. 17).

Advert for German investors: “Sponsor” my free research e.g. by buying my Article 9 fund. The minimum investment is around EUR 50. FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T: I focus on social SDGs and midcaps and use best-in-universe as well as separate E, S and G minimum ratings (compare ESG plus SDG-Alignment mit guter Performance: FutureVest ESG SDG – Responsible Investment Research Blog (prof-soehnholz.com))

Please go to page 2 (# indicates the number of SSRN downloads on November 8):

Seiten: 1 2

Impact Investing mit Voting und Engagement? (Opinionpost #194)

Impact Investing Vorbemerkung: Dieser Beitrag basiert auf „Divestments bewirken mehr als Stimmrechtsausübungen oder Engagement“ (Söhnholz 2020a).

Impact Investing ist trendy. Idealerweise können Anleger damit ordentliche Renditen erreichen und zugleich die Welt positiv verändern. Beim Kauf börsennotierter Geldanlagen werden Wertpapiere aber nur anderen Anlegern abgekauft und die Herausgeber der Wertpapiere erhalten kein zusätzliches Geld. Anbieter von liquiden Geldanlagen behaupten aber teilweise, dass sie Emittenten, also vor allem Unternehmen, durch Stimmrechtsabgaben und direkte Einflussversuche (Engagement) nachhaltiger machen können. Das sehe ich kritisch. Ich favorisiere die Konzentration liquider Investments auf die bereits nachhaltigsten Emittenten und die Suche nach Nachahmern dafür. Hier sind einige Argumente dafür:

Werbemitteilung: Kennen Sie meinen Artikel 9 Fonds FutureVest Equity Sustainable Development Goals R – DE000A2P37T6 – A2P37T mit Fokus auf soziale SDGs und Midcaps, Best-in-Universe Ansatz, getrennte E, S und G Mindestratings? Erhältlich ab ca. EUR 50 für deutsche Anleger.

Weiter geht es auf Seite 2:

Seiten: 1 2

Unsustainable bonds? Researchposting 102

Unsustainable bonds? 20x new research on climate risk, real estate, health, Trump, carbon credits, CDS, bank loans, bonds, interest rates, ESG indexing, pensions, gender, infrastructure, private equity, investment apps, ESG fintechs, climate AI by Roland Fuess, Tabea Bucher-Koenen, Paul Pudschedl, Markus Leippold et al.

Social and Ecological Research: Unsustainable bonds?

Longer hot: 800,000 Years of Climate Risk by Tobias Adrian, Nina Boyarchenko, Domenico Giannone, Ananthakrishnan Prasad, Dulani Seneviratne, and Yanzhe Xiao as of September 9^th, 2022 (#22): “… we study how climate evolves over the past 800,000 years … We find that the temperature-CO2 dynamics are non-linear, so that large deviations in either temperature or CO2 concentrations take a long time to correct … even conditional on the net-zero 2050 scenario, there remains a significant risk of elevated temperatures for at least a further five millennia” (p. 26/27).

Reduce green incentives? The Low-Carbon Rent Premium of Residential Buildings by Angelika Brändle, Roland Füss, Jörg Schläpfer, and Alois Weigand as of September 22^nd, 2022 (#53): “The operation of residential real estate accounts for a large part of worldwide greenhouse gas emissions …. we analyze 39,791 rental contracts from 2,438 residential properties in the Switzerland … our results suggest that apartments in low-carbon buildings have higher net rents compared to dwellings which emit more carbon emissions. … the higher willingness-to-pay for low-carbon housing is not decisively driven by a tenant’s higher preference for living in an environmentally-friendly apartment. … based on capitalization rates from 432 transactions, we suggest that the market value is on average higher for carbon neutral apartment properties due to lower expected risk premiums. … incentive structures for sustainable housing have to be carefully evaluated by policy makers as higher market values of low-carbon buildings compensate investors for cutting CO2 emissions” (p. 17/18).

For my approach to this blog see 100 research blogposts since 2018 – Responsible Investment Research Blog (prof-soehnholz.com)

For more current research please go to page 2 (# indicates the number of SSRN downloads on November 1st):

Seiten: 1 2

ESG regulation and more (Researchblog #101)

ESG regulation: >15x new research on climate, regulation, (un)sustainable funds, SDGs, greenium, ESG reporting, voting, wealth, buy-and-hold, private equity, private real estate and AI by Roman Inderst, Andreas Hoepner et al.

Ecological and social and governance research: ESG regulation

Climate-heuristics: Harnessing the power of communication and behavior science to enhance society’s response to climate change: A white paper for comment by Edward Maibach, Sri Saahitya Uppalapati, Margaret Orr, and Jagadish Thaker as of October 5^th, 2022 (#181): “… we provide an evidence-based heuristic for guiding efforts to share science-based information about climate change with decisionmakers and the public at large. … We .. also provide a second evidence-based heuristic for helping people and organizations to change their climate change-relevant behaviors, should they decide to. These two guiding heuristics can help scientists and other to harness the power of communication and behavior science in service of enhancing society’s response to climate change” (abstract).

For my approach to this blog see 100 research blogposts since 2018 – Responsible Investment Research Blog (prof-soehnholz.com)

For more current research please go to page 2 (# indicates the number of SSRN downloads on October 25th):

Seiten: 1 2

100 research blogposts since 2018

The beginning, stats and topics

„100 research blogposts“: I have been interested in scientific research for a very long time. Also, I have always enjoyed writing and published my first scientific articles while I was still a student. Since 2014 I have my own blog. I present links to and summaries of other people’s scientific contributions there since July 2018. Since mid-2019, I have been publishing 10 to 20 summaries of scientific studies every two weeks or so. On October 19, 2022, I created my one hundredth such research blogposts.

For this, I summarize research that I consider interesting and good. Initially, I focused only on research related to sustainable investing. Over time, other topics were added, specifically environmental, social, and corporate governance topics not directly related to investing, research on general investing topics such as asset allocation, fund selection, security selection, and risk management, and papers focusing on stocks, bonds, and especially alternative investments such as real estate, private equity, and hedge funds. In addition, cover financial technology (fintech) topics on advisortech, advicetech, wealthtech, and specifically model portfolios, robo-advisors, and direct indexing.

Research blogposts: Many sources and certain requirements

I mainly include scientific research articles which are free to access. My main source are the newsletters of publications of the Social Sciences Research Network. Currently, I subscribe to over 80 newsletters in the areas of Economics, Energy, Entrepreneurship, Financial Planning, Governance, Investments, Law, Management, Philosophy, Sociology, and Sustainability. From time to time I also actively search within SSRN for new contributions, especially those with the focus on ESG and Impact.

I also analyze contributions with interesting statistics from NGOs like Planet Tracker and for-profit organizations like Morningstar and MSCI and from my network (see e.g. my third-party links at www.prof-soehnholz.com). In addition, I point out innovative or surprising corporate activities, especially from the USA and Great Britain, which can serve as a model for German-speaking countries. I usually do not take into account unscientific surveys and purely conceptual or opinion contributions.

Early publication, but not necessarily peer-reviewed

Often, I am one of the first to download such contributions in their entirety. After briefly analyzing them, I include the contributions in my blogposts as soon as possible after they have been made available online. Also, I indicate the number of SSRN downloads at the time my blog post is published. This allows my readers to gauge how well-known or popular the research posts I include currently are.

At that point, the articles are often already scheduled for publication in scientific journals, but have not yet been reviewed by other scientists (i.e., without peer review). When downloading the full articles, SSRN explicitly points out this limitation. I myself cannot check the publications in detail for their quality, but I try to heed warning signals and to weed out bad contributions in advance, of which there are unfortunately more and more (cf. e.g. The Corrupt Institutions of Development Economics and Its Shadow Professoriate by Bryane Michael, September 10, 2022).

Anti-Quant research blogposts? Excursus on evidence

Left unconsidered are contributions that suggest they can generate future outperformance (alpha). This is due to the fact that many such studies are, in my opinion, based on so-called data mining and/or inappropriate or very sensitive models (this is what I call pseudo-optimizations, see e.g. Kann institutionelles Investment Consulting digitalisiert werden? Beispiele. – Responsible Investment Research Blog (prof-soehnholz.com)).

Similarly, I usually do not consider studies that attribute only positive diversification properties to any investments. The reason: If additional investments are different from already existing investments, one can, by definition, expect positive diversification properties.

Thus, I distance myself from so-called quantitative investors (quants) or a narrowly understood „quant“ evidence-based investments term. Thus, I do not define evidence-based investing to mean everything that can be shown with data as some others do, especially supporters of so-called factor investments. By evidence-based investments I understand that one should know the scientific results known at the time of investment and implement them if possible. I especially this definition: „Evidence-Based Investing (EBI) is a disciplined approach to asset management that combines the data we have from the past and present with honesty about the unknowable future. Where others would use forecasts, relationships or emotions to guide their decisions, practitioners of EBI would substitute facts, logic and reason“ (see 2016 Evidence Based Investing Conference by IMN; see also Evidence-Based Investing – Interesting for all Passive and Robo-Advisor Fans).

My biases and how I use evidence myself

I also have conscious and perhaps unconscious biases in that I primarily include research that could be relevant to financial investors and people interested in sustainability from Germany, Austria and Switzerland. My approach is selective and means that I certainly can not include all good contributions on the topics I mentioned above in my blog. Moreover, I do not present the complete abstracts or summaries of the respective contributions, but only the most important results from my point of view.

I have now been involved with sustainable investing for quite some time. After co-developing a Sustainable Private Equity fund of funds in 2007, I introduced ESG selection criteria for several equity funds starting in 2012. I pioneered ESG ETF portfolios (2015), pure ESG portfolios (2016) and SDG ETF portfolios (2019) and I am one of the first to advocate Direct ESG Indexing in Europe. Already in 2017, half of the portfolios I offered publicly were sustainable. Since then, new portfolios have been developed almost exclusively using ESG criteria and, more recently, SDG (Sustainable Development Goals) criteria. To do this, I take into account the findings from the studies I analyze as much as possible.

I also use the research findings to advise interested parties and clients. In „Das Soehnholz ESG und SDG Portfoliobuch„, my current investment principles and rules are documented in detail and in an „archive“ the corresponding documentation of previous years is also publicly available. I also use the research findings for my other publications, including my now nearly 200 other (“opinion”) blog posts.

Free for all research blogposts, including competitors

I want to advance evidence-based investing in general, and I don’t necessarily expect everyone interested in it to invest in my portfolios. That’s why I want to make the research as widely known as possible. This works best if I give it away for free. I am especially happy about supporters who further publicize my research. This can be done, for example, through social media referrals. I also like to collaborate with other companies. For example, Exxec News provides part of my research to its users for free.

The relatively extensive time I invest in reading and preparing the research I mentally chalk up to „pro-bono“ or marketing costs. Obviously, whoever would like to support my research activities is welcome to invest – starting at about 50 Euro – in my investment fund (see www.futurevest.fund) and/or recommend this fund or my other (model portfolio) services.

Additional information

My investment philosophy and portfolios: The Soehnholz ESG and SDG portfolio book

Blog posts by topic: Passive, responsible and online investing

Research blog posts: The Soehnholz ESG and Impact Research Book

Numerous other publications/presentations/videos at www.prof-soehnholz.com

This text has been translated with www.DeepL.com/Translator (free version)