Many greens: Picture from Alexa from Pixabay with 3 frogs

Many greens: Researchpost #133

Many greens: 12x new research on crypto spillovers, toxic risks, greenwashing, green lending, greening ECB, climate communications, climate policy costs, green bonds, impact investing, inclusive fintech, political engagement and digital angst (# SSRN downloads on June 30ths)

Social and ecological research: Many greens

Crypto spillovers: The Effects of Cryptocurrency Wealth on Household Consumption and Investment by Darren Aiello, Scott R. Baker, Tetyana Balyuk, Marco Di Maggio, Mark J. Johnson, and Jason Kotter as of June 28th, 2023 (#421): “Using financial transaction-level data for millions of U.S. households, we show that household crypto investors appear to treat crypto as one piece of an investment portfolio, some households chasing crypto gains and other households rebalancing a portion of crypto gains into traditional brokerage investments. Households also use crypto wealth to increase their discretionary consumption. The MPC (Sö: Marginal propensity to consume) out of crypto wealth is substantially higher than the MPC out of equity wealth …. Households also withdraw crypto gains to purchase housing—both to enter the market as new buyers and to upgrade their existing housing. This increased spending on housing puts upward pressure on local house prices, particularly in areas that are heavily exposed to crypto assets” (p. 33). My comment: I am worried about the effects of future crypto crashes on the real economy

Toxic effects: Pollution Risk and Business Activity by George Zhe Tian, Buvaneshwaran Venugopal, and Vijay Yerramilli as of June 18th, 2023 (#32): “… we use major toxic chemical spills as shocks to the pollution risk of their local neighborhoods and examine the consequent effects on local small business. …. Establishments in the smallest size quartile experience large reduction in sales, modest reduction in employment, and significant increase in likelihood of exit following exposure to pollution shocks, whereas those in the largest size quartile experience increase in sales and employment. … We also find that there is a significant and persistent exodus of population and income from counties that experience major toxic spills“ (p. 33/34).

Japanese greenwashing: Environmental Greenwashing: The Role of Corporate Governance and Assurance by Frendy, Tomoki Oshika, and Masayuki Koike as of May 17th, 2023 (#82): “First, companies with an indication of greenwashing decrease the extent of their disclosures for a given level of environmental performance. Second, those companies are likely to employ environmental assurance to intensify the greenwashing practice. … We found that organizational-level corporate governance characteristics of Japanese corporations are ineffective in mitigating greenwashing“ (p. 20).

Climate enforcement: The Environmental Spillover Effect through Private Lending by Lili Dai, Wayne R. Landsman, and Zihang Peng as of May 13th,2023 (#69): “We find evidence indicating that when one borrower experiences an enforcement action targeted by the Environmental Protection Agency (EPA), other firms sharing the common lender reduce toxic emissions in the following years. This spillover effect is more pronounced for lenders with stronger monitoring incentives and abilities and for borrowers with greater environmental pressures and larger similarities to EPA-targeted firms. Further analyses show increased abatement efforts and decreased profit margins following the enforcement shocks spread through lending networks. Taken together, these findings suggest that lenders can learn from and respond to borrowers’ EPA enforcement actions when dealing with other borrowers that pose similar environmental risks” (abstract).

ECB climate policy: Enhancing Climate Resilience of Monetary Policy Implementation in the Euro Area by Jana Aubrechtová, Elke Heinle, Rafel Moyà Porcel, Boris Osorno Torres, Anamaria Piloiu, Ricardo Queiroz, Torsti Silvonen, and Lia Vaz Cruz of the ECB as of June 23rd, 2023 (#28): “The European Central Bank (ECB) extensively reviewed its monetary policy implementation framework in 2020-21 to better account also for climate change risks. This paper describes these considerations in detail to provide a holistic perspective of one central bank’s climate-related work in relation to its monetary policy implementation framework. … Climate-related disclosures, improvements in risk assessment, a strengthened collateral framework and tilting of corporate bond purchases are the main pillars of the framework enhancements. … It also takes stock of the different challenges involved in the identification and estimation of climate change-related risk, how these can be partially overcome, and when they cannot be overcome, how they can constrain the ability of financial institutions, including central banks, to take further action. … This paper also examines possible future avenues that central banks, including the ECB, might take to further refine their monetary policy implementation using an assessment framework for climate change-related adjustments“ (abstract).

Climate communication: Ten key principles: How to communicate climate change for effective public engagement by Maike Sippel, Chris Shaw, and George Marshall as of June 19th, 2022 (#364): “This report summarises up-to-date social science evidence on climate communication for effective public engagement. It presents ten key principles that may inform communication activities. At the heart of them is the following insight: People do not form their attitudes or take action as a result primarily of weighing up expert information and making rational cost-benefit calculations. Instead, climate communication has to connect with people at the level of values and emotions. Two aspects seem to be of special importance: First, climate communication needs to focus more on effectively speaking to people who have up to now not been properly addressed by climate communications, but who are vitally important to build broad public engagement. Second, climate communication has to support a shift from concern to agency, where high levels of climate risk perception turn into pro-climate individual and collective action” (abstract).

Responsible investment research: Many greens

Climate policy costs: The Impact of Climate Change and Carbon Policy on Company Earnings by Matt Goldklang, Bingzhi Zhao, Ummul Ruthbah, Trinh Le, and Ben Bowring as of June 22th, 2023 (#158): “… we … build a framework for an asset-level, climate adjusted valuation of company earnings. In the European context, we see disparate impacts between and within sectors with carbon pricing impacts largest in the heavy emitting sectors, equivalent to -2% of earnings at the mean, whereas the physical impacts of climate change are more geographically segregated, with a median impact of -14% discounted 20 years into the future“ (abstract).

Brown trust: Green bonds pay when trustworthy by Sang Baum Kanga and Jiyong Eom as of May 30th, 2023 (#37): “… our empirical results support that green bond investors would pay more when they have greater confidence in the green management capability of the issuer. … the higher the relative intensity of GHG emissions, the greater the wedge between the green bond yield and the corresponding ”brown” bond yield. This may be puzzling to some readers because a firm with inferior environmental performance issues a more expensive green bond. However, the opportunity costs can explain this counter-intuitive finding. When a firm emits more GHG emissions, the firm is exposed to greater transition risk, and the firm’s environmental and financial successes become more correlated. Thus, the opportunity costs of committing greenwashing becomes higher, and the firm is more likely to use green bond proceeds responsibly. Therefore, the investor can regard the firm’s issuance of green bonds as a credible sign of commitment to green projects. Additionally, the markets are found to be statistically and economically sensitive to direct emissions (scope 1 emissions) rather than indirect emissions (scope 2 and 3 emissions) of bond issuers. According to our empirical results, the sub-investment-grade green bonds’ greenium is more negative than investment-grade green bonds. This may also surprise some audiences as the value of a green bond relative to its otherwise-equivalent conventional bond increases with a lower credit rating. …. Some might think the average greenium of -41 bps is small. However, recall that our sample, January 2013 to October 2021, is from low-interest-rate periods. More importantly, our primary market results are much more negative than other recent papers. … We conjecture that the green investors’ environmental preference may be reflected more clearly in the primary market, given their motives for providing affordable funds to the firm investing in green projects” (p. 18/19).

Impact PE: Private Market Impact Investing: A Turning Point by Michael Eisenberg, Katerina Labrousse and Ribhu Ranjan Baruah from the World Economic Forum as of May 8th, 2023: “Today, far more GPs (Sö: General Partners) at the higher end of the market are launching impact and energy transition products across private market asset classes and strategies, including infrastructure, buyouts, venture, private credit and other real assets. That means more and larger investments are made in impact-focused businesses, enabling the transition to a low-carbon economy” (p. 5). “Despite the many positive developments in the area of private market impact and transition investing over the last several years, much work remains to drive more capital to address the SDGs and accelerate the transition to a low-carbon economy. Asset owners need to further understand and develop convictions about the long-term secular tailwinds and favourable trends these opportunities present. Likewise, GPs need to further develop their track records and attract even more impact and transition investing talent to expand their capabilities in these areas and raise larger pools of capital over time” (p. 28). My comment: For public market “impact” investing see e.g. ESG Transition Bullshit? – Responsible Investment Research Blog ( and Active or impact investing? – (

Inclusive fintech: Fintech and Financial Inclusion: A Review of the Empirical Literature by Carter Faust, Anthony J. Dukes and D. Daniel Sokol as of May 16th, 2023 (#61): “Fintech has proven to enable financial inclusion on a global scale. This review highlighted case studies that demonstrate how digital lending, digital payment, and mobile money platforms can bring financial services to unbanked and underbanked communities. It further provided examples of how fintech can increase resilience in times of economic crises and shock, especially in underdeveloped regions. This review also acknowledged common challenges associated with the adoption of fintech, such as consumer data and privacy concerns, as well as infrastructure and education barriers“ (p. 151)

Political engagement: Collaborative investor engagement with policymakers: Changing the rules of the game? by Camila Yamahaki and Catherine Marchewitz as of June 25th, 2023 (#18): “A growing number of investors are engaging with policymakers on environmental, social and governance (ESG) issues, but little academic research exists on investor policy engagement. Applying universal ownership theory and drawing on eleven case studies of policy engagement … We identify a trend that investors engage with sovereigns to fulfil their fiduciary duty, improve investment risk management, and create an enabling environment for sustainable investments“ (abstract). My comment: Regarding shareholder engagement see also Shareholder engagement: 21 science based theses and an action plan – (

and other research

Digital angst: Digital Anxiety in the Finance Function: Consequences and Mitigating Factors by Sebastian Firk, Yannik Gehrke and Miachel Wolff as of May 13th, 2023 (#36): “Based on a survey of more than 1,000 employees working in the finance function of a large multinational business group, we observe that digital anxiety is relevant among 40% of the respondents. We further find that digital anxiety is negatively associated with employees’ work engagement, which further relates to fewer realized benefits from digital technologies. Finally, we argue and find that digital trainings, the digital affinity of peers, and transformational leadership can help to mitigate digital anxiety among employees” (p. 31).


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