Hungeralarm: The State of Food Security and Nutrition in the World von den Vereinten Nationen et al. vom 19. Juli 2021: “… the world is not on track to ending world hunger and malnutrition; and in the case of world hunger, we are moving in the wrong direction. This report has shown that economic downturns as a consequence of COVID-19 containment measures all over the world have contributed to one of the largest increases in world hunger in decades, which has affected almost all low- and middle-income countries, and can reverse gains made in nutrition. The COVID-19 pandemic is just the tip of the iceberg, more alarmingly, the pandemic has exposed the vulnerabilities forming in our food systems over recent years as a result of major drivers such as conflict, climate variability and extremes, and economic slowdowns and downturns. These major drivers are increasingly occurring simultaneously in countries, with interactions that seriously undermine food security and nutrition” (S. xvii).
Sehr teure externe Effekte: What’s the damage? Monetizing the environmental externalities of the Dutch economy and its supply chain von Bas Smeets, Guan Schellekens, Thomas Bauwens und Harry Wilting von De Nederlandsche Bank vom 15. Juli (#2): “For 30 environmental externalities this study has computed a price for the total production footprint of the Dutch economy including its supply chain in 2015 … Fwe find that the total environmental damage costs of the Dutch economy amount to EUR 50 Bn (7.3% of Dutch GDP). The lion’s share of these damages is associated with carbon emissions (EUR 27 Bn). Yet, other greenhouse gas emissions (EUR 7.7 Bn), pollution (EUR 11.6 Bn) and water use (EUR 3.8 Bn) are far from negligible. … we find that of the total environmental damage costs of the Dutch economy the majority is associated with foreign economies activities (EUR 31 billion) … based on impact ratios for each sector we show that for five sectors the average profits would, ceteris paribus, be insufficient to bear their environmental damage costs, should they be directly internalised. …” (S. 18).
Gute CO2-Steuer? Pricing for a Cooler Planet: An Empirical Analysis of the Effect of Taxing Carbon von Torben Mideksa vom 14. Juli 2021 (#8): “The results suggest that something has stabilized Finnish emissions since 1990. The stability is more pronounced when compared with the sharply rising emissions in other similar countries lacking a carbon tax. … it seems that the story of a carbon tax with increasing intensity is a plausible story consistent with the estimated emissions reductions” (S. 14).
Fahreinschränkungen helfen: Effectiveness, Spillovers, and Well-Being Effects of Driving Restriction Policies von Luis Sarmiento, Nicole Wägner und Aleksandar Zaklan vom 3. Juni (#5): “We study the effectiveness, spillovers, and well-being effects of low emission zones in Germany …. we show that previous estimates of the policy’s impact on traffic-related air pollution significantly underestimate its effectiveness. We provide evidence of beneficial and harmful policy spillovers to neighboring areas, and increases in ozone due to changes in the chemical balance with precursor contaminants. … we further find that the policy decreases subjective well-being despite clear evidence of health benefits. The decline in well-being … is transitory” (abstract).
Gute Innenluft ist wichtig: Human health and productivity outcomes of office workers associated with indoor air quality: A systematic review von Juan Palacios, Kristopher Steele, Zhengzhen Tan und Siqi Zheng vom 12. Juli (#15): “Of 101 reports identified …, 42 studies conducted in 10 countries and 3 continents, including 6,850 subjects were eligible for analysis. Our review showed that individuals exposed to indoor air quality settings above ASHRAE minimum standards (defined as ventilation rates 17 CFM per person and Carbon Dioxide (CO2) steady states of 1000 parts per million (ppm)) were more likely to experience increased poor levels of health, performance and productivity under these conditions” (abstract).
Ungeschützte persönliche Daten: How data can be used against people: A classification of personal data misuses von Jacob Leon Kröger, Milagros Miceli und Florian Müller vom 16. Juli (#25): “The eleven categories of data misuse demonstrate that access to personal information can be a powerful instrument (and sometimes even a necessary precondition) for harming, discriminating, influencing, and oppressing people. Importantly, many of these threats are independent from the victim’s law-abidance and may therefore also affect people who supposedly have “nothing to hide”. … The ultimate purpose of personal data protection is not to protect data, but to protect people against the harms resulting from data disclosure and misuse“ (S. 10).
Accelelatoren funktionieren: Is Innovation Really in a Place? Accelerator Program Impacts on Firm Performance von Sheharyar Bokhari, Andrea Chegut, Dennis Frenchman und Isabel Tausendschoen vom 7. Juli (#19): “We investigate the impact of an entrepreneurial amenity for urban agglomeration, accelerator programs, upon start-up firm’s private equity performance. Accelerators are firm development programs that utilize physical space, human capital development programming, mentorship, financial capital, and community engagement to accelerate the financial feasibility of start-up firms. A sample of US accelerator treated and matched control firm’s over the 2005 to 2015 period yields a study of 16,720 firms. Results indicate that there is statistically significantly more cumulative funding for accelerated firms …. Secondly, … firms with pre-funding when coming into an accelerator leads to higher cumulative funding. Lastly … This study supports evidence of correlation between start-up firm performance and accelerator program amenities.” (abstract).
Institutionelle gegen Research? Institutional ownership and the nature of corporate innovation von Sampsa Samila, Markus Simeth und David Wehrheim vom 21. Juni 2021 (#117): “We examine the long-term effects of institutional ownership on the nature of corporate innovation using firm-level data on public firms operating in the U.S. over the 1991–2014 period. We make a conceptual distinction between upstream research (“R”) and downstream development (“D”). We show that higher institutional ownership is associated with a decrease in scientific research activities, as measured by scientific publications. We obtain similar findings for novel patent characteristics that allow us to assess the extent to which upstream scientific research is used in downstream development efforts. … Institutional ownership is also not associated with changes in downstream development“ (S. 26/27).
ESG überall: Daten
Mehr ESG Daten sind besser: The Unreasonable Attractiveness of More ESG Data von Mike Chen, Robert von Behren und George Mussalli vom 8. Juli (#19): “…even ESG ratings from well-resourced ESG ratings providers contain deficiencies and bias. In this report, we documented one such bias. Namely, the more ESG data a company has in the public domain, the higher that company’s MSCI ESG score tends to be. We also document that companies with more publicly available ESG data are likely to enjoy a lower WACC. This may be the result of a cognitive bias, where companies with more published ESG data are perceived to be better companies from an ESG perspective, even though there is not enough data to justify this conclusion” (S. 16).
ESG Ratings könnten besser sein: Semi-Supervised Text Mining for Monitoring the News About the ESG Performance of Companies von Samuel Borms, Kris Boudt, Frederiek Van Holle und Joeri Willems vom 29. Juni 2021 (#27): “This chapter presents a methodology to create frequency-based and sentiment-based indicators to monitor news about given topics and entities. We apply the methodology to extract company-specific news indicators relevant to Environmental, Social and Governance matters. … We find that the indicators often anticipate substantial negative changes in the scores of the external ESG research provider Sustainalytics” (S. 21).
KI hilft ESG: Implications for Artificial Intelligence and ESG Data von Andrea Gasperini, Martina Macpherson und Matteo Bosco vom 10. Juni 2021 (#149): “… pragmatism dictates the use of multiple sources of information to avoid being exposed to unexpected risks, especially in portfolio construction … subjecting investment choices to the neutral eyes of an independent third-party verifier specializing in ESG will help strengthen the essential trust between managers and investors” (S. 8).
ESG-Outperformance nimmt ab: Chasing The ESG Factor von Abraham Lioui und Andrea Tarelli vom 8. Juli (#693): “We provide empirical evidence suggesting that: i) highly-rated firms have been outperforming low-rated ones in the last three decades; ii) the alphas feature a strong time variation, affected by variations of risk aversion and investors’ tastes for ESG; iii) filtered alphas converge to negative values toward the end of the sample, in line with equilibrium predictions; and, finally, iv) disagreement across data vendors has substantial implications for the construction of a pure ESG factor” (S. 36). Mein Kommentar: Verantwortungsvolle (ESG) Portfolios brauchen keine Outperformance – Verantwortungsvolle (ESG) Geldanlage (prof-soehnholz.com)
Umwelt-Rating ist weiterhin renditerelevant: Environmental transition alignment and portfolio performance von Olivier Guéant, Jean-Guillaume Peladan, Alain Robert-Dautun und Peter Tankov vom 8. Juli (#16): “The choice of a specific ESG metric being crucial, we focus on the Net Environmental Contribution, a robust open-source measure of environmental transition alignment. From a universe of 752 European stocks, we select subsets of stocks with high and low NEC scores, and compare the performance of equal-weighted and capitalization-weighted portfolios constructed from these subsets over the 2015-2020 period. The high-NEC portfolios outperform the low-NEC ones consistently throughout the period, and particularly during 18 months starting mid-2019, both before and during the COVID crisis” (abstract).
ESG Reportingchaos: The best ESG reporting framework for your business von Daniel Botterill von RIO von 2021: “While many business leaders agree that ESG reporting is beneficial, they don’t all use the same reporting standards. In fact, there is a veritable alphabet soup of frameworks to choose from, designed by various non-profits, industry groups, and international organisations. The result is too much of a good thing. Navigating these frameworks is tricky, and choosing one or more that align with your goals can be difficult” (S. 2).
Sozialtaxonomie: Draft Report by Subgroup 4: Social Taxonomy von der Platform on Sustainable Finance vom Juli 2021: “… the first task of the social taxonomy subgroup of the EU Platform for Sustainable Finance is to suggest a structure for a social taxonomy, bearing in mind the following: 1. what constitutes a substantial social contribution 2. how to not do significant harm 3. what activities are harmful. … The group has identified four main differences between a social and an environmental taxonomy. 1. Economic activities such as job creation are inherently socially beneficial. A social taxonomy has to distinguish between these inherent benefits and added social benefits such as improving access to quality healthcare or ensuring decent jobs. 2. Environmental objectives and criteria can be based on science, but a social taxonomy could be founded on international authoritative standards of topical relevance such as the International Bill of Human Rights. 3. The environmental taxonomy links criteria to economic activities. However, some social aspects, such as collective bargaining or tax transparency, cannot be linked to economic activities. Rather, they must be linked to the economic entity. 4. For some social topics it might be more difficult to develop meaningful quantitative criteria” (S. 4/5).
ESG überall: Investments
Strengere ESG Indizes sind besser: What drives sustainable indices? A framework for analyzing the sustainable index landscape von Andrea Jacoba und Marco Wilkens vom 8. Juli 2021 (#16): “Besides traditional comparisons of return and risk indicators (step one), we analyze the sustainability profile of sustainable indices while actively managing the presence of ESG rating disagreement (step two). For the determination of index-specific return and risk sources, we integrate sustainability factors in factor analyses and risk decomposition approaches (step three). A performance attribution analysis based on sustainability classes increases the transparency on the composition strategies of sustainable indices (step four)” (abstract). Mein Kommentar: Verantwortungsvolle Investments im Vergleich: SRI ETFs sind besser als ESG ETFs – Verantwortungsvolle (ESG) Geldanlage (prof-soehnholz.com)
Kaum einfache ESG Tradingopportunitäten: Persistence in ESG and Conventional Stock Market Indices von Guglielmo Maria Caporale, Luis Gil-Alana, Alex Plastun und Inna Makarenko vom 3. Juni 2021 (#40): “… examine the persistence of two sets of 12 ESG and conventional stock price indices from the MSCI database over the period 2007-2020 for a large number of both developed and emerging markets. As ESG indices include companies with higher transparency in their case one would expect lower information asymmetry and thus higher market efficiency compared to the case of standard stock indices. The R/S results imply that there are no significant differences between the two types of indices in terms of the degree of persistence and its dynamic behaviour. However, higher persistence is found for the emerging markets examined (especially the BRICS), which are less efficient and thus offer more opportunities for profitable trading strategies. … These findings can be rationalised by noting that, in the absence of stringent reporting regulations, several companies simply pretend to comply with ESG criteria while in actual fact their investment decisions are not affected by those (a phenomenon which is known as “washing” in its various forms); thus it is not surprising that their stocks should have the same persistence properties as those of conventional ones“ (S. 16/17).
ESG Kreditmarkt: ESG Lending von Sehoon Kim, Nitish Kumar, Jongsub Lee und Junho Oh vom 1. Juli 2021 (#184): „The “ESG lending” market, where loan contract terms are contingent on borrower ESG performance (i.e., ESG-linked loans), or where loans are issued for specific green projects (i.e., Green loans), has grown exponentially from $6 billion in 2016 to $173 billion in 2019. Much of this growth is driven by ESG-linked loans which are widespread across various industries and well developed capital markets, especially in civil law countries. ESG-linked loans are issued in sizeable amounts by large and publicly listed borrowers, and are often structured through revolving credit facilities by large groups of syndicates led by reputable “ESG specialist” global banks, who keep tight relationships with borrowers. Green loans are smaller project finance vehicles, similar in format to green bonds, yet issued to mostly privately held borrowers. They do not tend to attract large cross-border syndicates. We find that ESG loans tend to be written by borrowers and lenders with superior ESG profiles ex-ante, and find no evidence that their ESG performances deteriorate ex-post after ESG loan issuance. Overall, our results indicate that borrowers capable of maintaining high ESG standards and lenders capable of coordinating and monitoring ESG loan contracts drive the emergence of ESG banking activities around the globe” (abstract).
Niedrigere Kreditzinsen durch Greenwashing: Greenwashing and Bank Loan Contracting: Does Environmental Disclosure Quality Matter to Creditors? von Najah Attig, Mohammad Rahaman und Samir Trabelsi vom 13. Juli (#12): “We find that elevated greenwashing is associated with lower loan cost, leading to significant reduction in debt-service payments by firms. However, when we examine the overall design of a loan contract, including the price, fee structure, and non-price terms, we find that creditors use a complex pricing structure to ensure an appropriate expected return rather than a single price measure such as loan spread. … Furthermore, lenders impose tougher covenant restrictions on those firms compared to others (S. 25).
ESG ist wichtig für Altersversorger: ESG and Downside Risks: Implications for Pension Funds von Zacharias Sautner und Laura Starks vom 7. Juli (#24): “We argue that the long-term horizons of pension funds exposes them to the long-lived effects of many ESG risks, especially those related to climate change. The potential consequences of being underfunded also leaves pension funds particularly exposed to ESG-related downside risks. We demonstrate how downside risks may affect pension funds in the face of climate change. We provide evidence showing that institutional investors think that climate risks are imminent today and have important financial implications for their portfolio firms. We also show that these risks are priced in financial markets. Finally, we present evidence on whether and how institutional investors address climate-related risks in the investment process. We show that the investors tend to prefer to employ risk management and engagement strategies, rather than divestment, to address the climate risk in their portfolios. Overall, our evidence implies that pension funds should develop processes to identify, measure, and manage ESG-related downside risks, especially those related to climate change” (S. 15/16).
Nachhaltiges Kirchengeld: Ethisch-nachhaltig investieren Eine Orientierungshilfe für Finanzverantwortliche katholischer Einrichtungen in Deutschland vom Zentralkomitee der deutschen Katholiken und der Deutschen Bischofskonferenz vom Juli 2021: „Die vorliegende Orientierungshilfe … will die Verantwortungsträger in kirchlichen Einrichtungen unterstützen, nach Wegen für ein ethisch-nachhaltiges Investieren zu suchen. Die Orientierungshilfe beschreibt in den ersten beiden Kapiteln, unter welchen Vorzeichen sich kirchliche Einrichtungen auf den Weg zum ethisch-nachhaltigen Investment begeben. Das dritte Kapitel stellt die Bausteine vor, die ein solches Investment ausmachen. Im vierten Kapitel werden acht konkrete Schritte zum ethisch-nachhaltigen Investment benannt. Das fünfte Kapitel zeigt auf, dass dieses Investment den wachsenden Anforderungen an Glaubwürdigkeit und Transparenz im Umgang der Kirche mit ihrem Geld gerecht werden kann“ (S. 7). Mein Kommentar: Schade, dass z.B. nicht auf Best-in-Universe und DVFA PRISC eingegangen wird, vgl. PRISC – Policy for Responsible Investment Scoring: Die Taxonomiealternative von der DVFA – Verantwortungsvolle (ESG) Geldanlage (prof-soehnholz.com)
ESG überall: Impact Investments
Sind Kontroversen gut? Boosting Sustainability and Financial Performance: The Role of Supply Chain Controversies von Ignacio Tamayo-Torres, Leopoldo Gutierrez-Gutierrez und Antonia Ruiz-Moreno vom 13. Juli (#6): “This investigation concludes that higher levels of SSCM (Sustainable Supply Chain Management) controversy are beneficial for corporate sustainability. These controversies increase firms’ sustainability practices (ESG) two years later” (S. 31).
Ist weniger Gehalt sinnvoll? CEO Compensation: Evidence from the Field von Alex Edmans, Tom Gosling und Dirk Jenter vom 8. Juli 2021 (#410): “We survey directors and investors on the objectives, constraints, and determinants of CEO pay. … Respondents view intrinsic motivation and reputation as stronger motivators than incentive pay. They believe pay matters to CEOs not to finance consumption, but because it affects perceptions of fairness. The need to fairly recognize the CEO’s contribution explains why flow pay responds to performance, even though CEOs’ equity holdings already provide substantial consumption incentives, and why peer firm pay matters beyond retention concerns“ (abstract).
Corporate CO2 Framing: “Difficult Political Work”: Strategic Responses to Climate Risk by Carbon-intensive Corporations von Marcel Metzner und Anette Mikes vom 29. Juni 2021 (#17): “Based on research on 19 European carbon-intensive corporations in the chemical, steel, and utility industries, we explore how companies frame and reconcile their climate-risk-related objectives with their financial commitments, and enact a variety of response strategies. Overall, we find that corporations in heavy industries deploy four generic climate-response strategies: (1) Purposeful Green Strategies, (2) Engagement Strategies, (3) Green Differentiation, and (4) Defensive Strategies. We show that the organizational enactment of these strategic responses is conditioned by (1) corporations’ framing of climate risk as a threat or opportunity, (2) the perceived compatibility of decarbonization demands with existing commitments, and (3) their internal representations of feasible decarbonization-goals and responses” (abstract).
Grün nur für Reiche? Voting for Tomorrow: Climate Change, Environmental Concern, and Green Voting von Roman Hoffmann, Raya Muttarak, Jonas Peisker und Piero Stanig vom 30. Juni 2021 (#20): “… we analyze the impact of exposure to climate extremes on environmental concern and Green voting for a large panel of European countries. Combining high-resolution climatological data with regionally aggregated and harmonized information on environmental concern (42 Eurobarometer surveys, 2002-2019, 34 countries) and European Parliamentary electoral outcomes (7 elections, 1990-2019, 28 countries) at the subnational level, we find a significant and sizeable effect of temperature anomalies, heat episodes and dry spells in the previous 12 months on green concern and voting. The effects differ significantly by region and are most pronounced in regions with a cooler Continental or temperate Atlantic climate, and weaker in regions with a warmer Mediterranean climate. The relationship is moderated by regional GDP suggesting that climate change experience increase public support for climate action only under favorable economic conditions” (abstract).
Gute Aufsichtsratsdiversität: Board Gender Diversity and Firm Value in Times of Crisis: Evidence from the COVID-19 Pandemic von Farida Akthar, Mahdi Veeraraghavan und Leon Zolotoy vom 28. Juni 2021 (#41): “We provide robust evidence that stocks of the firms with gender-diverse boards experienced higher abnormal returns during the period when negative market sentiment induced by the outbreak of pandemic was at its peak. In cross-sectional analysis, we find that the documented effect was amplified among financially constrained firms and firms with longer cash conversion cycle, while was mitigated for firms led by management teams with higher managerial ability. We also find that the documented effect was amplified among firms with high information uncertainty. Collectively, our findings are consistent with the view that market interpreted board gender diversity as a positive signal about firm’s ability to weather the implications of crisis triggered by the COVID-19 pandemic” (abstract). Mein Kommentar: Wir haben 2014 festegestellt, dass höhere Frauenanteile im Aufsichtsrat für Anleger vorteilhaft sein können, vgl. Fetsun, A. und Söhnholz, D. (2014): A quantitative approach to responsible investment: Using ESG multifactor models to improve equity portfolios, Veritas Investment Arbeitspapier, präsentiert auf der PRI Academic Network Conference in Montreal, 23.9., vgl. hier.
Aktien im Ruhestand? Investing for Retirement Income: A Comparison of Asset Allocations and Spending Strategies von Mathieu Pellerin vom 6. Juli (#243): “Our results have a number of takeaways for retirement planning and glide path design. First, a glide path with a moderate allocation to equities at retirement can generate similar retirement income to a more aggressive allocation while significantly reducing the volatility of outcomes. Second, while long-maturity inflation-indexed bonds may be volatile in wealth terms, they can help manage inflation and interest rate risk, which ultimately reduces the volatility of retirement income. Third, an income-focused allocation combined with a well-thought-out spending plan can sustain retirement spending over several decades. When it comes to longevity risk, a high allocation to equities cannot substitute for proper risk management and retirement planning” (S. 29). Mein Kommentar: Unsichere Rente: Private Altersvorsorge besser mit Aktien (prof-soehnholz.com)
Noch ein REIT-Vorteil: Estimating Market Fundamentals from REIT data von David Geltner, Anil Kumar und Alex Van de Minne vom 7. Juli (#32): „we propose a new methodology for the estimation of fundamental property-level investment real estate time series performance and operating data using real estate investment trust (REIT) data. The methodology is particularly useful to develop publicly accessible operating statistics, such as income or expenses per square foot“ (abstract). Mein Kommentar: Immobilien-Diversifikation mit Immobilienaktien und REITs (prof-soehnholz.com)
ESG überall: Advicetech und Direct ESG Indexing
Vermögensverwaltung der Zukunft: Die bionische Vermögensberatung und -verwaltung ist hybrid in Bionic Wealth – Die nächste Generation der Vermögensanlagen ist inspiriert vom Leben, von Kim Y. Mühl vom Juni 2021 (nicht frei verfügbar): „Mit der Blockchain verändert sich die Wertübertragung grundlegend … Die Cloud ermöglicht neue digitale Geschäftsmodelle … Datengetriebene Bionic Customer Relationship Management-Systeme helfen Finanzunternehmen … Künstliche Intelligenz und maschinelles Lernen bieten neue Einsichten … Nachhaltigkeit wird zur tragende Säule … Nachhaltigkeit ist kein Trend und ESG mehr als eine Investitionschance … Islamic Fiance wird ein großer Wachstumsmarkt … Crowdfunding bietet Finanzunternehmen neue Investitions-Möglichkeiten …“ (S. 535/536).
Direct Indexing ist auch für Vanguard interessant: Fund News Advisors Can Use: Vanguard, BlackRock Bet Big on Personalization von Diana Britton vom 16. Juli 2021 auf wealthmanagement.com: “Vanguard announced plans to purchase Just Invest, a wealth management technology company with a direct indexing offering, the fund company’s first-ever corporate acquisition. … The acquisition will help Vanguard build out its direct indexing offering; … It will add to the firm’s $3 trillion financial intermediary business, serving RIAs and bank and broker/dealer advisors. The move follows a tidal wave of deals in the direct indexing space, including Morgan Stanley’s acquisition of Eaton Vance and its Parametric direct indexing business; BlackRock’s deal to acquire Aperio, which provides customized index equity SMAs; and most recently JPMorgan Chase & Co.’s move to buy OpenInvest, a financial-technology firm that offers a custom indexing solution”.
Direct ESG Indexing: „USA wieder Vorreiter … Self-Indexing als Basis …Transparenz und Digitalisierung müssen weiter steigen … Wenn all das der Fall ist, kann Direct ESG Indexing zur ernsthaften Konkurrenz für Anbieter von aktiven aber auch passiven Fonds werden“ (Söhnholz, D. (2021): Direct ESG Indexing: Ideal für Institutionelle und Privatkunden? in Bionic Wealth von Kim Y. Mühl vom Juni 2021, S. 218/219 (nicht frei verfügbar). Vgl. Direct ESG Indexing: Die beste ESG Investmentmöglichkeit auch für Privatkunden? – Verantwortungsvolle (ESG) Geldanlage (prof-soehnholz.com)
BigFintech Risiken: BigFintechs and their impacts on macroeconomic policies – Dialogue on Global Digital Finance Governance von Katherine Foster, Sofie Blakstad, Sangita Gazi und Martijn Bos vom 21. Juni 2021 (#23): “BFTs have the potential to positively impact LDCs’ (Lease Developed Countries) GDP through increasing access to financial services and employment. However, without incentives to contribute to national taxation, to support excluded demographics, or to maintain ethical value chains, their potential to negatively impact countries’ fiscal space and budget for the provision of core services and infrastructure could be greater than any potential benefits they confer. BFTs facilitate credit to individuals and SMEs, enabling growth, but at a cost of locking in SMEs and crowding out ‘bricks and mortar’ SMEs in favour of online suppliers. Business growth in LDCs does not guarantee growth in market demand, so it can lead to greater business and loan defaults without additional market interventions. Further, as COVID-19 results in contracted markets, increased borrowing is inducing a high level of defaults in micro-businesses. Regulatory response is fragmented, reactive and targeted at individual BFTs, with the potential to create negative consumer perception of regulators and impact on consumers. BFTs’ unmonitored value chains could create significant environmental and social impacts resulting in decreased economic growth, especially in LDCs with low levels of worker and environmental protection at the end of the value chain, where foreign investment is likely to be more extractive. BFTs could, with the right incentives, provide tools to add transparency and efficiency to local markets, potentially creating greater opportunities for FDI in LDCs, both in communities and infrastructure projects”(S. 15).
KI muss kontrolliert werden: Financial Risk Management and Explainable, Trustworthy, Responsible AI von Sebastian Fritz-Morgenthal, Bernhard Hein und Jochen Papenbrock vom 8. Juli 2021 (#52): “1. There need to be general principles, requirements and tests to control model risk and fitness-for purpose for each model. … 2. … it will be necessary and useful to combine the expertise and approaches of classical risk management and governance with those of data science and AI knowledge. 3. Many aspects of AI governance, algorithmic auditing and risk management of AI systems can be addressed with technology and computing platforms. … 4. Explainability, interpretability and transparency of models, data and decision making will be key to even enable an appropriate possibility to manage remaining model risks (“Explaining Explainable AI”). … 5. One particular aspect of the “Explainable AI” agenda is to enable the fairness of AI decision making or decision support from a societal perspective (linked to the ESG agenda)” (S. 2).