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Good green banking: 8+x new practical research on bad plastic credits, good green pledges, relative ESG investing, positive net zero banking, value creation intransparency, transition belief consequences, bio damage premium, many sustainability guides, and angel investor success factors (# shows SSRN full paper downloads as of Dec. 12th, 2024. Low numbers indicate that few people have read that research)
Ecological and social research
No plastic credits? Unpacking plastic credits: Challenges to effective and just global plastics governance by Sangcheol Moon et al. as of Dec. 9th, 2024 (#23): “Amid growing concerns over plastic pollution and ongoing efforts to develop a global plastics treaty, this paper critically examines plastic credits as a compensatory measure for addressing plastic pollution. Despite claims of being a novel financing and control measure, plastic credits mirror the shortcomings of carbon credits and fail to account for the material complexities and varied impacts of different types of plastics. If linked to public policy, plastic credits risk creating regulatory loopholes and delaying more effective measures like sector-specific plastic reduction. We argue that plastic credits do not represent an innovative approach to genuine plastic pollution reduction or its financing; instead, they could exacerbate fragmented plastics governance and reinforce legitimation of waste colonialism“ (p. 1).
ESG investment research (in: Good green banking)
Good pledges: Corporate Green Pledges by Michael Bauer, Daniel Huber, Eric Offner, Marlene Renkel, Ole Wilms as of Dec. 11th, 2024 (#5): “We identify corporate commitments for reductions of greenhouse gas emissions—green pledges—from news articles using a large language model. About 8% of U.S. firms have made green pledges, and these companies tend to be larger and browner than those without pledges. Announcements of green pledges significantly and persistently raise stock prices, consistent with reductions in the carbon premium. Firms that make green pledges subsequently reduce their CO2 emissions“ (abstract). My comment: With my shareholder engagement I ask for disclose of broad GHG scope 3 emissions so that all stakeholders can require Scope 3 pledges by these companies, see Shareholder engagement: 21 science based theses and an action plan
Relative ESG: The Evolving attractiveness of relative ESG ratings to institutional investors by Christian Riis Flor and Mo Zhang as of Dec. 10th, 2024 (#8): “We find that institutional investors significantly increase holdings in firms with below-average ESG performance when these firms make ESG improvements. Conversely, firms with already high ESG ratings attract less additional institutional investment, even with continued ESG advancements. … “ (p. 8). “Our findings indicate that only socially constrained institutions consistently prefer companies with high ESG performance. Meanwhile, sophisticated institutional investors, such as hedge funds, respond to ESG improvements only in firms with exceptionally high or low ESG grades. In contrast, less sophisticated investors, such as banks, are more likely to respond to ESG rating changes in firms with average ESG performance” (p. 3). My comment: I focus my limited capital on the already best ESG rated companies and make proposals how they can become even better with the hope, that companies which are not so well rated will (have to) follow the ESG leaders (see Shareholder engagement: 21 science based theses and an action plan).
SDG investment research
Good green banking: The Economics of Net Zero Banking by Adair Morse and Parinitha Sastry as of Dec. 5th, 2024 (#36): “Banks have voluntarily committed to align their lending portfolios with a net zero path toward a decarbonized economy. In this review, we explore the economic channels for why portfolio decarbonization might be consistent with lender profit maximization. … We uncover multiple roles for risk arguments influencing decarbonization. Moreover, decarbonization and green investment are tied to enhanced profitability through bank lending growth. Yet, the literature has many dots yet to connect” (abstract).
Value disclosure deficits: Value creation reporting for sustainable development – a framework based on the current state of reporting by Patricia Ruffing-Straube and Saverio Olivito as of Dec. 5th, 2024 (#36): “… assessing the impact of firms on people and planet proves difficult as combining the large amount of information provided in sustainability reports to a clear indication of impact is not a trivial exercise. … only 55% of Swiss firms report on sustainable value creation in 2022. The disclosures made on this topic are not easily comparable and mostly lack clear targets and in particular information on target achievement. … Euro Stoxx 50 firms … results are largely comparable. Based on our findings we propose a novel framework for the analysis of sustainable value creation reporting …” (p.26). My comment: I suggest to focus on SDG-aligned revenues, see SDG Revenue Alignment: Bringing Clarity to Impact Investing by Clarity AI
Important transition beliefs: Climate Transition Beliefs by Marco Ceccarelli and Stefano Ramelli as of May 6th, 2024 (#494): “We provide survey evidence of considerable heterogeneity in investors’ expectations regarding the state of the energy transition by 2030, 2040, and 2050. These climate transition beliefs capture a dimension of human thinking different from environmental preferences or climate concerns. Investors with more optimistic transition beliefs associate green investments with higher returns and lower risk, and they are more likely to prefer a green over a conventional equity fund. The role of climate transition beliefs in green investing appears more important for investors without strong pro-environmental preferences” (p. 31).
Bio-damage premium? The World Market Price of Biodiversity Risk by William W. Xiong as of Dec. 10th, 2024 (#22): I investigate whether biodiversity risks are priced in global stock markets by studying 21,248 publicly listed stocks across 117 countries from April 2016 to June 2023. “… I examine firm-level biodiversity risk exposures and show that they are positively associated with stock returns worldwide …. this study shows that firms involved in biodiversity incidents experience higher monthly stock returns in the month of incident(s), … notably in the US” (abstract).
Many sustainability guides: Alan S. Gutterman has published several detailed sustainability guides from 2021 until September 2024 e.g. with the following topics: Sustainability Standards and Instruments, Manufacturing, Product Development, Sales and Distribution, Fair Operating Practices, Sustainable Leadership, Sustainability and Organizational Culture, Strategic Planning for Sustainability, Stakeholder Relationships and Engagement, Financing the Business and Sustainable Finance and Impact Investment, Investing for Impact
Other investment research (in: Good green banking)
Angel success factors: Are Some Angels Better than Others? Johan Karlsen, Aksel Mjøs, Katja Kisseleva, and David T. Robinson as of July 10th, 2024: “… data from Norwegian equity transaction records to measure the performance of angel investors … angel investors exhibit a form of performance persistence: Namely, the re turns on the previous angel investment and the success or failure of the last firm the angel invested in strongly predict the performance in the current investment and success or failure of the current firm. … Our evidence suggests that industry-specific knowledge mixed with deal-selection skill is important for explaining performance differences across angel investors. … We are the first to link the performance in angel investments to performance in other investments …” (p. 36/37).
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Werbung (in: Good green banking)
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