Greenwashing Banks Illustration: Green Clothespin pciture by Robert Allmann from Pixabay

Greenwashing banks? Researchpost #129

Greenwashing banks? 12x new research on immigration, suppliers, greenwashing, banks, ESG ratings, AI voting, green bonds, climate inflation, (climate) VCs and crowdinvesting by Christian Klein et al. (# shows the number of SSRN-downloads on May 31st, 2023):

Social and ecogical research

Positive immigration: Firm-Level Prices, Quality, and Markups: The Role of Immigrant Workers by Giulia Sabbadin as of March 17th, 2023 (#16):“… I study … French manufacturing traders. I find that the share of immigrant workers in a local labor market is positively associated with firm-level export prices and quality and that this quality advantage translates to higher markups. I present evidence for the mechanism accounting for these relationships and find that the presence of immigrant workers is positively associated with firms importing higher-price (higher-quality) intermediate inputs, which are key to producing higher-price (higher-quality) exports. The hypothesized economic mechanism is that immigrant workers help firms overcome informational barriers to sourcing higher-price (higher-quality) inputs from abroad. I provide evidence consistent with immigrant workers having specialized knowledge of the upstream market” (abstract).

Climate inaction? Climate Policies in Supply Chains by Swarnodeep Homroy and Asad Rauf as of May 15th, 2023 (#33): “… we show that suppliers are more likely to adopt climate action and climate governance practices following the adoption of emission targets by their customers. The effects are economically meaningful and increase with the relative bargaining power of the customer firm over its suppliers …. However, we find no evidence that adopting climate policies following customer pressure, on average, changes supplier firms’ climate outcomes (emissions and energy expenses) and leading indicators of emission abatement (capital investments and R&D expenses)“ (p. 24). My comment: ESG-evaluation and engaging suppliers is one of my top shareholder engagement priorities, compare Shareholder engagement: 21 science based theses and an action plan – (

Sustainable investment research: Greenwashing banks?

Greenwashing Corporates: Show & Tell: An Analysis of Corporate Climate Messaging and its Financial Impacts by Joseph E. Aldy, Patrick Bolton, Zachery M. Halem, Marcin T. Kacperczyk, and Peter R. Orszag as of Aril 22nd, 2023 (#288): “… investors are increasingly scrutinizing a patchwork of voluntary climate-related communications–namely public disclosures, emission reduction commitments, and soft information from earnings calls and other public announcements. We observe, for large-cap U.S. firms, a rise in the usage of all forms of climate communication from 2010-2020. We also find evidence that a majority of firms are not decarbonizing on a sufficient trajectory to meet committed emission reduction targets. In regard to financial effects, we show that increased transparency from disclosure can offset a significant portion of the price-to-earnings discount associated with carbon emissions, especially for firms in the energy and industrial sectors. … “ (abstract). My comment: Disclosure of Scope 3 emissions is another of my most important engagement topics.

Greenwashing banks? “Glossy Green” Banks: The Disconnect Between Environmental Disclosures and Lending Activities by Mariassunta Giannetti, Martina Jasova, Maria Loumioti, and Caterina Mendicino as of May 24th, 2023 (#250): “… we show that banks with extensive environmental disclosures lend more to brown borrowers and do not provide more credit to firms in green industries. These results are not driven by banks’ financing of brown borrowers’ transition to greener technologies. Instead, banks lend to the weakest borrowers in brown industries, especially if they have low capital adequacy. Our results suggest that banks overemphasize their climate goals and credentials while continuing their relationships with polluting borrowers“ (abstract). My comment: I do not consider banks in my most sustainable investment portfolios such as my mutual fund

Bank ESG factors: Bank and ESG score by Belinda Laura Del Gaudio, Serena Gallo, Daniele Previtali, and Vincenzo Verdoliva as of  April 26th, 2023 (#79): “This paper analyses factors affecting international banks‘ Environmental, Social and Governance (ESG ) performance from 2008-2018. Using data for all listed banks in the U.S., E.U. and U.K., we show that the characteristics of banks‘ boards influence their ESG performance. In particular, banks with a higher female presence, a larger board size, high networking and more qualified directors are more likely to show better ESG performance. Furthermore, we find that banks with a propensity to pursue a fintech innovation strategy are more likely to have a better ESG performance …. also banks‘ financial factors influence their sustainability profile” (abstract).

Better big? Size bias in refinitiv ESG data by Juris Dobrick, Christian Klein, and Bernhard Zwergel as of May 19th, 2023: “Even though Refinitiv claims to have minimized the well-known size bias present in ASSET4 ESG data, we find that it is still there and has even become … A one unit increase in company size corresponds to an increase in the ESG (E) score of around 5.8 (6.7) compared with previous 3.5 (4) in Drempetic et al.(2020). For G and S it is 3.7 and 6.3, respectively” …. My comment: There are still enough well ESG-rted small and midsize companies available for investment, see e.g. Artikel 9 Fonds: Kleine Änderungen mit großen Wirkungen? – (

ESG factor: ESG as risk factor by Juris Dobrick, Christian Klein, and Bernhard Zwergel as of May 26th, 2023 (#14): “… we address the question of whether factors constructed using ESG (Environmental, Social, Governance) scores could potentially meet the necessary requirements for risk factors in multi-factor models. … We pay particular attention to the problem of divergent scores across different rating providers and investigate whether the regression results of 4- and 5-factor models converge. … We find that there are ESG factors across all investigated rating providers that capture common-variation in stock returns over time, indicating that ESG should be considered in common asset pricing models” (abstract).

AI Voting? Outsourcing Voting to AI: Can ChatGPT Personalize Index Funds’ Voting Decisions? by Chen Wang as of April 25th, 2023 (#184): “Asset Management giants like Vanguard have already been utilizing AI to “create customized financial plans that help clients meet their short-term and long-term financial goals.” … By fine-tuning ChatGPT, its ability of generalization can be enhanced by training with curated datasets. Thus, investment funds can employ customized ChatGPT to make self-informed and personalized proxy voting more in line with their shareholders’ interests and preferences. … The cost of hiring experts to fine-tune the model, as well as the cost of acquiring high-quality data, could be a significant obstacle for small funds. … there were also limitations such as token limitations and long-range dependencies. … AI models trained on biased data could lead to biased voting decisions …” (p. 41/42).

Green demand: The Demand for Green Bonds by Hari Gopal Risal, Chandra Thapa, Andrew P. Marshall, Biwesh Neupane, and Arthur Krebbers as of April 22nd, 2023 (#314): “… we find that the demand for corporate GB is about 32 to 42% points higher than comparable conventional non-GB issued by similar firms. Further, the demand for debut GB is stronger than seasoned GB offerings and higher for those issued by financial firms compared to non-financial firms. Finally, our results also show that the demand is higher for GB issued by firms with higher environmental commitments and issued in countries with better environmental performance“ (abstract).

Traditional and alternative investment research: Greenwashing banks?

Heated inflation: The impact of global warming on inflation: averages, seasonality and extremes by Maximilian Kotz, Friderike Kuik, Eliza Lis, and Christiane Nickel as of April 24th, 2023 (#31): “… in the absence of historically un-precedented adaptation, future warming will cause global increases in annual food and headline inflation of 0.92-3.23 and 0.32-1.18 percentage-points per year respectively, under 2035 projected climate … Moreover, we estimate that the 2022 summer heat extreme increased food inflation in Europe by 0.67 (0.43-0.93) percentage-points and that future warming projected for 2035 would amplify the impacts of such extremes by 50%“ (abstract).

Outcrowded VC? Crowdfunding vs. Venture Capital: Complements or Substitutes? A Theoretical Assessment by Guillaume Andrieu and Alexander Peter Groh as of April 25th, 2023 (#39): “Entrepreneurs need to weigh campaign cost as well as lower profit requirements of the crowd against the support of VCs. In addition, VCs make efficient abandonment decision and thus improve resource allocation which benefits the relationship. A passive crowd cannot detect lemons and thus creates model frictions. The model also predicts that the emergence of CF has created a shock for the VC industry. It has increased competition, and thus reduced VCs’ deal flow, and their profits. The model suggests that CF forces VCs to strengthen their own expertise and to specialize. CF may have reduced the number of VC actors, or makes them shift towards later financing stages“ (p. 24).

Tech-Defizite: Wagniskapital für Net Zero: Potenziale und Herausforderungen von Steffen Viete und Milena Schwarz von der KfW vom 17. Mai 2023: “Im Jahr 2022 wurden in Deutschland über 1,5 Mrd. EUR in 118 Finanzierungsrunden in Climate-Tech-Start-ups investiert. Dabei haben Investoren ihr Engagement bei Climate-Tech-Start-ups über die Jahre sogar deutlich stärker ausgebaut als im Rest des gesamten VC-Marktes. … Zwischen den Jahren 2019 und 2022 machten sie über 13 % des gesamten Investitionsvolumens im Markt aus. … in den USA …. wurde … zwischen 2019 und 2022 das 4,7-fache des Volumens in Deutschland investiert. … Aufgrund des hohen Kapitalbedarfs sind für die Weiterentwicklung des Finanzierungsumfeldes für Climate-Tech-Start-ups vor allem Fonds von Bedeutung, die auch größere Runden finanzieren können. … Die Forschung legt nahe, dass insbesondere im Industriesektor noch großes Potenzial zur Emissionsminderung durch technische Innovation besteht“ (S. 1).


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