Polluting AI illustration from Pixabay by Gerd Altmann
8x new research papers on migration, cities, ESG Ratings, ESG (credit) risks, climate versus financial investors, green companies, polluting AI, biodiversity (# shows the number of full paper SSRN downloads as of March 13th, 2025)
Social and ecological research
BILD beats migration: Attitudes to Migration and the Market for News by Razi Farukh, Matthias Heinz, Anna Kerkhof, and Heiner Schumacher as of May 29th, 2024 (#32): “We examined the coverage of the topic of migration in three different news markets: Germany, Hungary, and the US. … For Germany, we found that most national news outlets adopt an attitude to migration that is in between the two ideological extremes, but closer to pro- than to anti-migration campaigns. … Only the largest newspaper in Europe– the tabloid newspaper Bild– changed its attitude to migration from very positive to fairly negative within a few months … for the US, we found that, the average attitude to migration in the market for news is comparable to that in Germany. However, both the most positive and the most negative news outlet in the our US sample are fairly large …“ (p. 29).
Good city growth: Cities, Aggregate Welfare, and Growth by Katja Gehr, and Michael Pflüger as of March 10th, 2025 (#6): ”Escalating housing costs and a lack of affordable housing in desirable places have brought cities in the focus of public and political debate, in recent years. Current research converges on the idea that these housing market pressures stem not only from the interplay of demand and supply but are significantly influenced by regulatory measures, enacted by local policymakers to protect the interests of city incumbents (‘city insiders’) at the expense of ‘city outsiders’. … Our key policy counterfactual involves a reduction of land-use regulations in Germany’s Top 7 such that the population in each grows by 10%. This yields an overall welfare benefit of 1.11% per person, but only mild losses for city incumbents, which indicates that urban containment policies in Germany have significant societal costs …“ (p. 35/36).
ESG investment research (in: Polluting AI)
Reputation ratings: Measuring ESG Risk Management: Are ESG Ratings Reliable Predictors? by W. Chad Carlos, Shon R. Hiatt and Bell Piyasinchai as of Nov. 14th, 2024 (#88): “Our analysis reveals that while ESG ratings are strongly tied to firm reputation, only one MSCI appears to consistently predicts future ESG-related risks …. Furthermore, we found that both ESG risk management and firm reputation contribute to the relationship between ESG ratings and financial performance, with reputation playing a more significant role. … In contrast to credit ratings …the breadth of dimensions that ESG ratings attempt to capture may make it unlikely for different ESG ratings to achieve the level of convergence similar to credit ratings” (p.23/24).
ESG credit risks: ESG Ratings, ESG News Sentiment and Firm Credit Risk Perception by Fangfang Wang, Florina Silaghi, Steven Ongena, and Miguel García-Cestona as of March 7th, 2025 (#93): “We document a significant increase in CDS (Sö: Credit default Swap) spreads following ESG rating downgrades, especially for the social pillar, while we find a muted reaction to ESG upgrades. A similar asymmetrical effect is documented for ESG news. We further show that the adverse effect of ESG downgrades on the CDS market is mitigated in the presence of positive ESG sentiment, a transparent information environment and higher rating disagreement. Lastly, the reaction is stronger for firms with lower creditworthiness, higher bankruptcy probability and tighter financial constraints” (abstract). My comment: I focus on firms with good ESG-ratings and divested much more than expected because of ESG-downgrades and the portfolio volatility is rather low.
SDG investments
Green vs. brown investor? The Alignment of Corporate Carbon Performance and Shareholder Preferences: Evidence of a Capital Market Separation by Johannes Leister, Martin Rohleder, and Marco Wilkens as of March 5th, 2025 (#46): “… This study is the first to empirically test the predicted capital market separation, wherein climate-conscious investors primarily hold firms with strong carbon performance, while financially driven investors retain those with weaker climate records. … We show that green firms consistently concentrate in sustainability-focused portfolios, whereas brown firms remain in traditional investor holdings. The market separation intensifies over our sample period … the Paris Agreement significantly altered market dynamics: post-Paris, separation intensified in the U.S., while were less pronounced in the EU …“ (abstract).
Seriously green? Commitment to Climate Action: Global Evidence from Carbon Performance Disclosure by Hai Hong Trinh and H. Kent Baker as of March 11th, 2025 (#12): “… “How Do We Know Firms Seriously Commit to Climate Action?” Our findings show that firms commit to climate action if they simultaneously present the following outcomes. First and foremost, firms should have to disclose their carbon performance with improving environmental performance. Second, carbon-disclosing firms maintain progressive and sound ESG performance with no ESG controversies expected. Third, financial analysts and the management boards of carbon-disclosing firms pay increasing attention to climate change risks …” (abstract). My comment: I focus on firms with good ESG ratings and very few serious controversies and engage with them to disclose broad (Scope 3) carbon performance
Polluting AI: The Silent Polluter: Artificial Intelligence and CO2 Emissions by Ashrafee T. Hossain and Neal Willcott as of March 8th, 2025 (#19): “We find statistically significant and economically consequential results supporting a positive association between AI investments and CO2 emissions. Additional analyses indicate that this positive association is prominent for firms that lack ethical behavior or those that are poorly governed. … the market provides support for AI investments in the form of higher valuations as long as CO2 emissions remain low; however, valuations decline when AI investments are accompanied by higher emissions. Concurrently, we find that CEO compensation is lower for firms that invest in AI while causing more CO2 emissions compared to their counterparts that make such investments but keep CO2 emissions at a lower level“ (p.59/60).
Biodiversity lecture: Lecture Notes On Biodiversity by Thierry Roncalli as of March 10th, 2025 (#33): 266 pages on biodiversity with lots of interesting data and sources (amazing as always with Thierry Roncalli).
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Werbung (in: Polluting AI)
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Der Fonds konzentriert sich auf die UN-Ziele für nachhaltige Entwicklung mit durchschnittlich einzigartig hohen 99% SDG-vereinbaren Umsätzen der Portfoliounternehmen und sehr hohen E-, S- und G-Best-in-Universe-Scores sowie einem besonders umfangreichen Aktionärsengagement bei derzeit 28 von 30 Unternehmen (siehe auch My fund).
Zum Vergleich: Ein Gesundheits-ETF hat eine netto SDG-Umsatzvereinbarkeit von 12%, Artikel 9 Fonds haben 21%, Impactfonds 38% und ein ETF für erneuerbare Energien 45% (vgl. Hohe SDG Umsätze? Nur wenige Investmentfonds!).
Insgesamt hat der von mir beratene Fonds seit der Auflage im August 2021 eine ähnliche Performance wie traditionelle globale Small- und Mid-Cap-Fonds (vgl. z.B. Fonds-Portfolio: Mein Fonds | CAPinside und Globale Small-Caps: Faire Benchmark für meinen Artikel 9 Fonds?).
Ein Fondsinvestment war also bisher ein „Free Lunch“ in Bezug auf Nachhaltigkeit: Ein besonders konsequent nachhaltiges Portfolio mit marktüblichen Renditen und (eher niedrigeren) Risiken. Vergangene Performance ist allerdings kein guter Indikator für künftige Performance.