Sustainable Investments and Markets
Sustainable Companies and Ratings
Fiduciary Duty and Incentive Systems
Sustainable Companies and Ratings
Improving Measurements of Companies’ Environmental Performance
Anders Biel, Ulrika Lundqvist, Sofia Poulikidou
Aims to develop relevant sustainability evaluation criteria, both present and future oriented, for the two business sectors “automobile” and “forestry and paper”. This work includes presenting a transparent methodology for the operationalization to develop these criteria and for ranking the performance of companies based on these criteria. Based on a life-cycle model and three different weighting methods of environmental consequences, results show among other things that the use of fossil fuels in vehicles contributes to approximately 70% of their total environmental impact.
Sustainable Corporate Governance
Lars G. Hassel, Henrik Nilsson, Eli Amir, Juha-Pekka Kallunki
The project extends the resource-based view on environmental performance of the firm by introducing board composition and board member characteristics to explain leaders and laggards on environmental performance and environmental reporting. The project creates an ethical compass of the board by using the past criminal records of the CEO and directors as a proxy for the diversity of the board. The research demonstrates, among others, that the proportion of convicted board members in SIX 300 companies are negatively related to environmental performance and reporting quality. The papers have a potential to demonstrate the importance of a diversified board member structure and competence for the sustainability of the firm.
Value-based Sustainability Analysis of Nordic Companies
Ralf Barkemeyer, Breeda Comyns, Frank Figge, Zoe Foss, Tobias Hahn, Andrea Liesen
We have completed a pilot study of the carbon performance of 25 pulp & paper companies worldwide; for this pilot study, we have developed and successfully applied a web-based data collection mechanism aimed at a more efficient way of collecting corporate environmental performance data. We have also collected carbon performance data for more than 200 Nordic companies from a range of different sectors, which will form the basis for the environmental sustainability performance analysis of Nordic companies with the Sustainable Value approach. The results of the analysis will provide tangible benefits for financial market actors and in particular SRI practitioners.
Sustainable Development in Swedish Industry
Tommy Lundgren, Runar Brännlund, Per-Olov Marklund, Lammertjan Dam, Rolf Färe, Shawna Grosskopf
Adds knowledge about how policy induced and voluntarily adopted social responsibility behaviour affects the economics of a firm and their contribution to sustainable development. Results show that internal and external environmental policy indeed has an impact on the behaviour and performance of the firm. While some firms become more efficient or profitable due to policy, others experience the opposite. At sector level, carbon emissions per unit of output during 1990-2004 has decreased, mostly due to the introduction of a CO2 tax in 1991. The project gives insights into relationships between many aspects that are relevant for understanding how to incorporate industrial firms into a sustainable society, and hence of interest to numerous stakeholders in society; policy makers, firm managers, and institutional and private investors, as well as academics.
The missing link between returns and CSR scores – Latent variables
Elena Stanghellini, Marco Nicolosi
The ability to comply with CSR standards varies across industrial sectors and from one E.S.G. aspect to the other. For example, firms in the Financial sector may encounter less difficulty to comply with the Environment than firms in Oil and Gas. We built a latent variable Item-Response Model that takes these issues into account and measures the CSR ability of a firm accordingly. We used it to rank firms and to study the performances of Equally Weighted, Value Weighted and mean-variance optimal portfolios that select the best ones and exclude the worst ones. We also started to explore the dynamic version of the model.
Impact of Incentive System and Monitoring Frequency on Portfolio Managers’ Investment Decisions
Tommy Gärling, Maria Andersson
Surveys show that practice in Sweden is to incentivize portfolio managers based on short-term performance. In general people prefer to reap immediate benefits. This is confirmed by the results of our experiments in that short-term bonuses paid out every year are preferred to nominally equally large long-term bonuses. We have also shown that shorter evaluation intervals lead to worse performance than longer evaluation intervals. A third question addressed during 2011 is whether investors diversify portfolios by taking both short-term and long-term value development into account.
Incentive Schemes for CSR Asset Management – Delegated Portfolio Management in a Dynamic Setting
Stefano Herzel, Annalisa Fabretti, Marco Nicolosi, Fausto Gozzi
The objective of this project is to formulate a theoretical model for the study of the incentive systems for CSR Asset Managers. Under the working hypothesis that it is possible through the active management of a SR fund to obtain financial performances that are comparable or even better than those of a conventional fund, we propose a way to set the incentives according to the skill of portfolio managers and to the difficulty of their task. An important aspect of the project is the empirical validation of the hypothesis.
Sustainable Investment Research Platform
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