GHG math illustration with CO2 picture from Gerd Altmann from Pixabay

GHG math issues – Researchpost #134

GHG math: 10x new research on supply chains, oil and gas companies, EU taxonomy, green employees, green technologies, brown dividends, shareholder wealth and stock trading by Henrik Bessembinder, Andreas Hoepner, Christian Klein, Frank Schiemann and many more  (#: SSRN downloads on July 13th, 2023)

Ecological and social research: GHG math

Complex supplies: How Far Goods Travel: Global Transport and Supply Chains from 1965-2020 by Sharat Ganapati and Woan Foong Wong as of May 9th, 2023 (#94): “Transportation usage per unit of real output has more than doubled as costs decreased by a third. Participation of emerging economies in world trade and longer-distance trade between countries contribute to this usage increase, thereby encouraging longer supply chains. We discuss technological advances over this period, and their interactions with endogenous responses from transportation costs and supply chain linkages. Supply chains involving more countries and longer distances are reflective of reliable and efficient transportation, but are also more exposed to disruptions, highlighting the importance of considering the interconnectedness of transportation and supply chains in policymaking and future work” (abstract).

GHG math problems: Abominable greenhouse gas bookkeeping casts serious doubts on climate intentions of oil and gas companies by Sergio Garcia-Vega, Andreas G. F. Hoepner, Joeri Rogelj and Frank Schiemann as of May 23rd, 2023 (#136): “In our analysis of the Scope 1 emissions reported by companies from the Oil & Gas industry and their respective breakdowns, we found a considerably large amount of misreporting. First, on average, we find that 38.9% of the companies do not add up to the sum of Scope 1 emissions reported. …. in 15.5% of the cases, the sum of the breakdowns exceeds the total Scope 1 emissions reported by the company. … Scope 1 emissions only constitute a small, yet very easiest-to-report fraction of the GHG emissions O&G companies …“ (p. 10/11).

Greenwashing risk: Emissions gaming? A gap in the GHG Protocol may be facilitating gaming in accounting of GHG emissions by David Aikman, Yao Dong, Evangelos Drellias, Swarali Havaldar, Marc Lepere, and Matthias Nilsson as of June 2023: “The framework for calculating firms’ greenhouse gas emissions via the GHG Protocol is highly complex. It involves the collection and management of large datasets on companies’ activities, and both scientific and estimation uncertainty in translating such activities into emissions estimates. Moreover, there are substantial degrees of freedom created by the existence of multiple calculation methods and emission factor databases, which deliver markedly different emissions estimates for the same underlying activity data inputs. … If gaming opportunities are fully exploited, actual emissions for some firms could be several times larger than those currently reported“ (abstract).

German taxonomy gap: Let’s talk numbers: EU Taxonomy reporting by German companies by Jannis Luca Arnold, Thomas Cauthorn, Julia Eckert, Christian Klein and Sebastian Rink as of June 28th, 2023: “On average, 26 percent EU Taxonomy-eligible turnover is reported. … the Consumer Discretionary, Industrial, Real Estate, and Utility industries have substantially higher EU Taxonomy-eligible turnover, CapEx and OpEx. … Real Estate has the highest average EU Taxonomy-eligible turnover at 93 percent. In contrast, Health Care and Consumer Staples have zero percent EU Taxonomy-eligible turnover. The Utility industry has an average EU Taxonomy-eligible turnover of 26 percent. However, Utilities have the highest EU Taxonomy-aligned turnover (15 percent), CapEx (68 percent) and OpEx (34 percent). On average, three percent EU Taxonomy-aligned turnover (of eligible turnover) is reported“ (p. 42).

Green employees: Green Behavior: Factors Influencing Behavioral Intention and Actual Environmental Behavior of Employees in the Financial Service Sector by Joachim P. Hasebrook, Leonie Michalak, Anna Wessels, Sabine Koenig, Stefan Spierling and Stefan Kirmsse  as of August 30th, 2022: “A smartphone friendly online survey concerning the intention to improve and show ‘green behavior’ was sent to 1200 professionals working in 17 locations in 13 European countries, 470 of which responded to the survey (39%). From these participants, 20% are convinced of the need to act in a “green” manner, and only 5% are hardly accessible. Monetary benefits combined with social motives contribute to sustainable living, whereas financial benefits alone actually hinder it“ (abstract). My comment: Companies and investors should try to leverage the interest of employees in ESG. My respective stakeholder engagement proposal see Shareholder engagement: 21 science based theses and an action plan – (

Responsible investment research: GHG math

11 green key technologies: Delivering transformative impact from US green bank financing by McKinsey as of April 20th, 2023: “To reach net zero by 2050, the United States could need an estimated $27 trillion in climate investment. … This report focuses specifically on the estimated need for and impact of investment in 11 key technologies across three themes—household and community decarbonization, business decarbonization, and energy system transformation. Aiding these particular investments could advance the GHGRF’s (Sö: Greenhouse Gas Reduction Fund) dual goals of reducing emissions and benefiting disadvantaged communities while also fulfilling its mission to provide “additionality” through investments that would not have occurred without its funding” (p. 4).

Brown dividends: “Brown” Risk or “Green” Opportunity? The dynamic pricing of climate transition risk on global financial markets by Philip Fliegel as of July 13th, 2023 (#8): “I utilize the TRBC business classification to categorize companies in three climate sensitive sectors into high/low-risk portfolios based on the climate transition risk exposure of their technologies. … My results show that green stocks produce a highly significant double-digit annual alpha, especially in the 7 years following the Paris Agreement. This is well above all previous estimates and might be explained by my proposed methodology which can identify brown and green “pure-plays” in the most climate sensitive economic sectors. … The return expectation today is very different from 2013 … My dividend yield findings indicate that the expect payouts for brown portfolios today is indeed substantially higher compared to green portfolios“ (p. 23). My comment: Shouldn’t brown companies invest in green transition instead of distributing dividends? See ESG Transition Bullshit? – Responsible Investment Research Blog (

Supplier GHG math: Quantifying Supply Chain ESG Risks: A Flexible Framework by Alejandro Gaba, Toby Warburton, and Hao Yin from State Street as of July 13th, 2023 (#4): “.., the calculation of Scope 3 emissions is difficult and costly. … we propose a simple and intuitive approach to calculating the emissions resulting from a company’s base of suppliers. … Empirical tests suggest that the proposed metric makes a statistically significant contribution in explaining the outputs of conventional approaches, in addition to those from Scope 1 and Scope 2 measures. Furthermore, our model offers a flexible framework for evaluating other types of ESG risks embedded in a firm’s value chain” (Abstract). My comment: 2 of my five engagement focus topics are Scope 3 GHG emissions and supplier ESG evaluations, see Shareholder engagement: 21 science based theses and an action plan – (

Traditional investment research

Few big winners: Shareholder Wealth Enhancement, 1926 to 2022 by Hendrik Bessembinder as of June 18th, 2023 (#636):  “Investments in publicly-listed U.S. stocks enhanced shareholder wealth by more than $55.1 trillion in aggregate during the 1926 to 2022 period, even while investments in the majority (58.6%) of the 28,114 individual stocks led to reduced rather than increased shareholder wealth. The degree to which wealth enhancement is concentrated in relatively few stocks has increased over time: for example, the number of high-performing firms that explain half of the net wealth creation since 1926 decreased from ninety as of 2016 to eighty-three as of 2019 and to seventy-two as of 2022. I identify the firms with both the largest enhancements and largest reductions in shareholder wealth since 1926 and during more recent intervals” (abstract).

Too frequent info: Alert for Alerts: How Investment Price Tracking Alerts Affect Retail Investors by Che-Wei Liu, Yanzhen Chen, and Ming-Hui Wen as of June 5th, 2023 (#97): “… we reveal that price tracking alerts, which provide convenient access to price data and cost-effective investment monitoring, lead to increased trading activity, suboptimal market timing, and diminished investment returns. Furthermore, our findings suggest that the availability of such investment management tools intensifies overconfidence bias and magnifies the disadvantage of inadequate financial literacy“ (p. 35).


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