Nutrition changes: Picture shows aubergine caricature by nneem from Pixabay

Nutrition changes: Researchpost #163

Nutrition changes: 13x new research on biodiversity, food, socially responsible buying, SFDR, ESG data, green indices, derivatives, impact investing, ESG compensation, stock and bond risks, and financial advisor biases by Patrick Velte, BaFin, Morningstar and many others (# shows number of full SSRN downloads as of Feb. 15th, 2024):

Social and ecological research (in: “Nutrition changes”)

Man vs. biodiversity: The Main Drivers of Biodiversity Loss: A Brief Overview  by Christian Hald-Mortensen as of Oct. 18th, 2023 (#101): “The drivers of biodiversity loss are complex – this paper has examined the main drivers, namely agricultural expansion, climate change, overfishing, urbanization, and the introduction of invasive species. To avoid further biodiversity loss, the role of agricultural expansion and land use change becomes apparent as a cause of 85% of at-risk species” (p. 5/6).

Nutrition changes (1): European Food Trends Report: Feeding the Future Opportunities for a Sustainable Food System by Christine Schäfer, Karin Frick and Johannes C. Bauer as of Nov. 7th, 2023 (#41): “…Industry, logistics, retail and research are developing new solutions for a diet that does not come at the expense of the planet. By employing methods of agro-ecology and precision agriculture, farmers can produce in a more resource-efficient way. Smart data enables more efficient logistics. New virtual distribution channels and a vibrant creator economy – which includes food bloggers, influencers and online chefs – are shaking up the industry and are able to bring important issues to consumers’ attention. By using packaging that is recyclable or biodegradable, the processing industry is able to reduce its ecological footprint. Meanwhile, researchers have long since explored alternative protein sources based on cells or fermentation, the production of which generates fewer greenhouse gas emissions compared with conventional meat production” (p. 2).

Nutrition changes (2): From Intention to Plate: Why Good Dietary Resolutions Fail by Petra Tipaldi, Christine Schäfer and Johannes C. Bauer as of Jan. 11th, 2024 (#17): “What we eat accounts for more than 30% of man-made greenhouse gas emissions. … The majority of the Swiss population is aware of this: 98% want to change the way they eat, at least partially. 91% want to avoid generating food waste, more than three-quarters want to eat more healthy, seasonal and regional foods and even 42% want to often cut out fish and meat. Despite Swiss people being so motivated, the same products mostly end up on their plates like before, as a representative survey from the Gottlieb Duttweiler Institute shows. The study reveals: there is an intention-behaviour gap. … Consumers can do the most for the environment by avoiding food waste, reducing their consumption of fish, meat and animal products in general and buying food with the lowest possible CO2 emissions. The study also shows the extent to which companies, the retail industry and politicians can support consumers to seize their opportunities for action so that sustainable diets do not remain an intention but become a reality on consumers’ plates”.

Community & supply SCR: Which CSR Activities Motivate Socially Responsible Buying? by Katherine Taken Smith, Donald Lamar Ariail, Murphy Smith, and Amine Khayati as of Feb. 8th, 2023 (#14): “In support of prior research, our findings revealed consumers to be more inclined to purchase from companies engaged in CSR activities. … While consumers voiced support for CSR activities in each of the social issues, only two were identified as motivating socially responsible buying: i.e., community and supply chain. As a CSR issue, the term supply chain encompasses ethical labor concerns such as child labor and human trafficking. The term community refers to a company investing resources in the local economy. … females displayed significantly higher buying intentions towards companies that practice CSR. Females, compared to males, were more supportive of CSR activities related to ethics and philanthropy. … Non-conservative consumers, compared to conservative, exhibited a higher degree of socially responsible buying. … religious consumers, compared to non-religious, were more supportive of CSR activities related to community and ethics“ (p. 18/19). My comment: My shareholder engagement activities include a focus on suppliers by asking buyers to use comprehensive ESG-ratings, see Supplier engagement – Opinion post #211 – Responsible Investment Research Blog (

Responsible investment research (in: “Nutrition changes”)

Sustainable fund details: SFDR Article 8 and Article 9 Funds: Q4 2023 in Review? by Hortense Bioy, Boya Wang, Arthur Carabia, Biddappa A R from Morningstar as of Jan. 25th, 2024: “In the fourth quarter of 2023, Article 8 funds registered the largest quarterly outflows on record and Article 9 funds their very first quarterly outflows … Over the entirety of 2023, Article 8 funds registered net outflows of EUR 27 billion, while Article 9 funds collected EUR 4.3 billion and Article 6 funds garnered EUR 93 billion. Actively managed funds drove all the outflows in the fourth quarter as well as over the full year. Passive funds sustained their positive momentum. Assets in Article 8 and Article 9 funds rose by 1.7% over the quarter to a new record of EUR 5.2 trillion. Together, Article 8 and Article 9 funds saw their market share climb further to nearly 60% of the EU universe primarily due to continued reclassification from Article 6 to Article 8 or 9. We identified 256 funds that altered their SFDR status in the fourth quarter, including 218 that upgraded to Article 8 from Article 6, while only four funds downgraded to Article 8 from Article 9” (p. 1). My comment: There are only very few Article 9 funds with a focus on SDGs (if so, mostly ecology oriented funds) or small and midcaps. There is still limited competition (and overlap with other funds) for my small/midcap (social) SDG fund which – since inception – has a similar performance as traditional small/midcap funds (see Fonds-Portfolio: Mein Fonds | CAPinside)

ESG rating deficits: BaFin Marktstudie – Durchführung einer Marktstudie zur Erhebung von und Umgang mit ESG-Daten und ESG-Ratingverfahren durch Kapitalverwaltungsgesellschaften vom 14.2.2024: „Mithilfe einer Befragung von 30 deutschen KVGen und 6 ESG-Ratinganbietern untersucht die vorliegende Marktstudie der BaFin den Status Quo hinsichtlich der Erhebung und des Umgangs der KVGen mit ESG-Daten und Ratings. … 84% der KVGen zieht MSCI als Datenanbieter heran, gefolgt von ISS (44%), Bloomberg (28%) und Sustainalytics sowie Solactive (jeweils 20%). Über 70% der KVGen, die externe Datenanbieter heranziehen, nutzen mehr als einen Anbieter… Nur rund 38% der KVGen betrachten die Qualität extern erhobener ESG-Daten und Ratings als „hoch“ … Als Gründe werden neben der zum Teil schlechten Datenabdeckung auch die zum Teil unzureichende Aktualität der Daten genannt … während 64% der KVGen sich eine schnellere Beantwortung ihrer Fragen durch die Anbieter wünschten“ (p. 3-5). My comment: MSCI is not necessarily the best sustainability data provider. The costs of <50k EUR p.a. for ESG data seems low and not high to me. Most likely, (indirect) costs charged to the portfolio managers of the funds are not included in that figure. And those costs can be very high, if detailed and transparent reporting to end-investors is offered. Also, there is a (under)performance risk if there is crowding in highly MSCI rated investments (compare: Glorreiche 7: Sind sie unsozial? – Responsible Investment Research Blog (

Green index variations: Resilience or Returns: Assessing Green Equity Index Performance Across Market Regimes by An Duong as of Jan. 5th, 2024 (#20): “… we embark on a comprehensive examination of the performance differential between green equity indices, specifically the FTSE4Good series, and conventional equity indices across a diverse set of economies: the US, UK, Japan, Indonesia, Malaysia, Mexico, and Taiwan. … in periods of market stress, green indices often demonstrate slightly less negative returns than their conventional counterparts, … in developing economies, green indices exhibit higher volatility, indicating greater sensitivity to market downturns, contrasted with the lower volatility observed in developed markets. … In addition, Green indices show a higher likelihood of remaining in bearish states, suggesting either a resilience to rapid shifts or a slower adaptation to positive market changes “ (p. 31).

Commodity ESG: ESG and Derivatives by Rajkumar Janardanan, Xiao Qiao, and K. Geert Rouwenhorst as of Feb. 8th, 2024 (#40): “We present a simple conceptual framework to illustrate how ESG considerations can be applied to derivatives in practice, using the market for commodity futures as an example. Because derivatives do not target individual firms, we link the S and G scores to the geography of global production. … Some preliminary simulation evidence suggests that, for now, including ESG considerations in the selection of commodity futures would have not materially impacted the risk and return properties of investor portfolios” (p. 14).

Impact investment research (in: “Nutrition changes”)

Beyond ESG: From ESG to Sustainable Impact Finance: Moving past the current confusion by Costanza Consolandi and Jim Hawley as of Feb. 5th, 2024 (#86): “We argue that ESG/Sustainability is moving from being based primarily on ESG ratings and rankings … to sustainability (ESG) being based on mandated disclosure and analysis of externalities. We briefly examine the basis of ESG ranking and ratings confusion concluding that based on current methodologies of major providers results in neither significant change nor accurate disclosures by firms. Alternatively, we suggest an integration of externality data will significantly modify Modern Portfolio Theory as it does not account for externality effects either … Not accounting for externalities leads to sub-optimum economic system performance … Finally, we place these concepts and developments the context of global emerging regulatory and standard setting” (abstract).

Good ESG bonus? Archival research on sustainability-related executive compensation. A literature review of the status quo and future improvements by Patrick Velte as of Feb. 13th, 2024: “This literature review summarizes previous quantitative archival research on sustainability-related executive compensation (SREC) … there are clear indications that SREC has a positive effect on sustainability performance. In contrast to the business case argument for sustainability, this is not true for financial performance. We find major limitations and research gaps in previous studies that should be recognized in future studies (e.g., differentiation between symbolic and substantive use of SREC)” (abstract). My comment: I hope that there will be more such research, e.g. focusing on pay ratios, see Pay Gap, ESG-Boni und Engagement: Radikale Änderungen erforderlich – Responsible Investment Research Blog (

Other investment research

Risk versus time: The Long and Short of Risk and Return by Leo H. Chan as of Dec. 20th, 2023 (#31): “I show that risk increases as the measurement time frame shortens, while it decreases as the measurement time frame increases. … Over the long horizon, risk (as measured by standard deviation of returns) is no longer a concern. Rather, an investor should pay more attention to the total return of an investment portfolio. In this regard, what is considered risky (stocks) is a far better choice than what is considered safe (bonds)” (abstract).

Only stocks or more? Stocks for the Long Run? Sometimes Yes, Sometimes No by Edward F. McQuarrie as of Feb. 13th, 2024: “Digital archives have made it possible to compute real total return on US stock and bond indexes from 1792. The new historical record shows that over multi-decade periods, sometimes stocks outperformed bonds, sometimes bonds outperformed stocks and sometimes they performed about the same. New international data confirm this pattern. Asset returns in the US in the 20th century do not generalize. Regimes of asset outperformance come and go; sometimes there is an equity premium, sometimes not” (abstract).

Advisor bias: Financial Advisors and Investors’ Bias by Marianne Andries, Maxime Bonelli, and David Sraer as of Jan. 27th, 2024 (#73): “We exploit a quasi-natural experiment run by a prominent French brokerage firm that removed stocks’ average acquisition prices from the online platform used by financial advisors. … First, even in our sample of high-net-worth investors receiving regular financial advice, the disposition effect – investors’ tendency to hold on to their losing positions and sell their winning stocks – is a pervasive investment bias. Second, financial advisors do exert a significant influence on their clients’ investment decisions. Third, financial advisors do not actively mitigate their clients’ biases: when advisors have access to information relevant to their clients’ disposition effect – whether stocks in their portfolio are in paper gains or losses – clients exhibit more, not less, disposition effect“ (p. 25). … “(a) decrease in disposition effect bias leads to higher portfolio returns, increased client inflow, and a lower likelihood of leaving the firm” (abstract).


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