Impact measures: 6x new research on self-driving vehicle eco issues, green fuel taxes, brown mega-caps, climate risks for banks, issues with Paris Aligned Benchmarks, and (new) impact measures
Impact measures: 6x new research on self-driving vehicle eco issues, green fuel taxes, brown mega-caps, climate risks for banks, issues with Paris Aligned Benchmarks, and (new) impact measures von Timo Busch, Eric Prüssner et al. (#shows number of SSRN full paper downloads as of July 3rd, 2025)
Self-driving vehicle eco issues: Will New Driving Technologies Change the Value of Public Transportation Investments? by Imke Reimers and Benjamin Reed Shiller as of June 27th, 2025 (#5): “Self-driving vehicles (SDVs) are already available as ride-hailing services in several metropolitan area … In the context of the Boston region, we find, first, that the widespread adoption of SDVs significantly changes both home locations and transportation choices: workers will likely move further away from their workplace and become more likely to use cars for commuting, leading to increased congestion and lower public transit revenue. Second, we find that improvements in the public transit experience continue to meaningfully affect consumer behavior. Third, while these improvements cannot reverse the increase in miles driven effected by SDVs, their positive effects on public transit revenue can outweight those of SDVs if the improvements are large enough“ (p. 31/32).
Green taxes: Fuel taxation and environmental externalities: Evidence from the world’s largest environmental tax reform by Piero Basaglia, Sophie M. Behr, and Moritz A. Drupp as of June 26th, 2025 (#10): “… we evaluate the impact of Germany’s 1999 ecological tax reform on transport-related carbon and air pollutant emissions” (abstract). “The reform increased fuel taxes in Europe’s biggest transport sector in yearly steps from 1999 to 2003 up to 15.35 cents per liter” (p. 1). “We document sizable aggregate reductions for all emissions, exceeding 10 percent on average per year relative to synthetic baselines. … we estimate avoided external costs of more than EUR 100 billion, two-thirds of which stem from health benefits due to reduced air pollution. Emission reductions and associated monetized benefits are larger in lower-income regions, contrasting with a slightly regressive distribution of fuel costs“ (abstract).
Brown mega-caps: Market Power, Innovation, and the Green Transition by Rik Rozendaal as of June 25th, 2025 (#6): “… I document that firms with a higher degree of market power are, on average, more invested in dirty technologies than their direct competitors …” (abstract). My comment: Mega-caps have high market power and have very large allocations in typical investor portfolios, including ESG portfolios
Climate risks for banks: Climate Risk and Financial Stability: Some Panel Evidence for the European Banking by Sector Guglielmo Maria Caporale, Anamaria Diana Sova, and Robert Sova as of June 27th, 2025 (#7): “This paper investigates the impact of a number of climate change indices on financial stability in the banking sector in a set of 41 European countries by estimating a dynamic panel data model over the period 2000-2021. The analysis is conducted for both the full set of countries and two subsets including the EU and non-EU ones respectively. The climate change indices are generally found to have a negative effect on financial stability, namely higher climate risk is typically associated with lower financial stability of banks as indicated by lower Z-scores. However, the impact is smaller in EU countries compared to non-EU ones” (p. 19).
PAB issues: Paris-Aligned Benchmarks in Practice – Insights into implementation by Alexander Dobrinevski, Stuart Doole, and Saurabh Katiyar from MSCI Research and Development as of June 20th, 2025: “The PAB’s minimum 7% compounded annual GHG intensity decarbonization requirement has often been achieved through index turnover and weight reallocation toward lower-emitting (or less emission-intensive) firms. … Empirical attribution analysis is used to confirm that index design, rather than real-world decarbonization, is the current key driver of intensity reduction” (p. 5). “ … most scope 3 data used in indexes rely on market-wide modelling by climate data providers since companies’ own scope 3 estimates are based on such disparate methodologies. That leaves year on-year intensity constraints vulnerable to not only large corporate variation (companies change, and change their processes, and moreover, operate through profound dislocations like the COVID-19 pandemic) but also to enhancements to the external scope 3 estimation methodology” (p. 11). My comment: I try to invest in the already most sustainable stocks and funds, not in the ones showing high reductions.
Impact measures: Measuring the Impact of Sustainability-related Investments on the Real Economy – Reviewing Existing Methodologies and Data Gaps by Eurosif, University of Hamburg, and AIR, Timo Busch, Eric Prüßner, Nathalie Dogniez, and Aleksandra Palinska as of June 27th, 2025: “This report has explored the methodologies and data sources available for measuring the impact of sustainability-related investments on the real economy. Beginning with a conceptual framework, it outlined the critical elements of sustainability-related capital flows, distinguishing between financial market and real economy flows, namely capital expenditure (CapEx) and operational expenditure (OpEx). The report also highlighted the importance of understanding the pathways through which these investments translate into measurable environmental and social impacts” (p. 20). My comment: Asking companies to report SDG-exposures of capital and operational expenditures creates more bureaucracy. The author mention SDG revenues as a proxy for these impact measures (also see DVFA-Fachausschuss Impact veröffentlicht Leitfaden Impact Investing). Many data providers already report SDG-alignments of corporate revenues as impact measures (see Nachhaltigkeitsquoten: DVFA veröffentlicht Befragung zu Impact-Ratings und ihre Empfehlungen für Ratinganbieter und Investoren). Unfortunately, I know only few researchers and practicioners using SDG revenues as impact measures. Also, sdg revenues are rather easy to understand and control, even for retail investors (see Maximale Portfolio-Nachhaltigkeit: Was geht? and SDG-Umsätze: Die wichtigste Nachhaltigkeitskennzahl).
