Successful liquidity events can leave founders and early-stage employees with significant amounts of wealth from one day to another. But for many entrepreneurs that made their way by leading mission-focused businesses, traditional wealth management practices that don't reflect their values have little appeal.
Increasingly, wealth holders in these situations are looking for ways to have a positive impact with their resources, financial and otherwise. This article features the stories of four such individuals (two of which are alums of CSP programs) and how they began their impact journeys.
Read the full article on Illuminem (16.06.23)
In this article for the Harvard Law School Forum on Corporate Governance, Julian Kölbel shares insights from his research done with Stefan Zeisberger, CSP Managing Director Falko Paetzold, and fellow CSP Collaborator Florian Heeb.
Do investors care enough about impact that they’re willing to pay more for it? In their study of 219 experienced investors, they found that 93% would choose an impact fund if the fees were the same, but very few would pay higher fees for 10x more impact. This leads them to wonder if the “warm glow” of making a less bad choice might be more important to these investors than the concrete impacts themselves.
Read the full article on the Harvard Law School Forum on Corporate Governance site (08.06.23)
[EN: The idea behind impact investing]
Doing well by doing good: that’s the idea behind impact investing. And it goes beyond divestment: impact investors can also have a positive effect by investing in polluting or destructive companies and industries and using their leverage to push for sustainable changes. The German newspaper Rhein-Neckar-Zeitung spoke to CSP Managing Director Falko Paetzold about CSP’s research in order to introduce its readers to the concept of impact investing.
Find the full article (in German) on the RNZ website (08.05.23)
While many funds have dropped the label following stricter regulatory guidance, the remaining Article 9 funds have been “inundated” with money, Bloomberg reports. Even though the EU definition of “sustainable investments” has yet to be pinned down and scrutiny remains high, these 100% “sustainable” funds attracted almost $30 billion of new client money in 2022 and account for $360 billion of client assets.
This piece highlights research by CSP Collaborator Adrien-Paul Lambillon CSP’s Academic Head Marc Chesney analyzing these so-called “Dark Green” Article 9 funds. They found that Article 9 funds tend to favor larger companies simply because they can afford to assemble more of the data that portfolio managers are looking for, and seem to value climate metrics more than human rights violations, for instance.
Read the full article on Bloomberg (05.03.23)
Even under Article 9–the highest level of sustainable finance performance as classified under SFDR–there are still opportunities for greenwashing. This article in Responsible Investor summarizes the analysis of Article 9 funds done by CSP Collaborator Adrien-Paul Lambillon CSP’s Academic Head Marc Chesney titled How Green is ‘Dark Green’?, shared as a working paper in February 2023.
The researchers found a “pronounced correlation” between companies’ MSCI ESG ratings and their “greenness” scores, but underline that the former relates to a company’s ESG risks, not its overall impact. As such, when it comes to being included in an Article 9 fund, actual emissions levels still seem to matter less than stated climate targets, which is reflected in the inclusion of many large corporations in these supposedly “dark green” funds.
Read the full Responsible Investor article (22.02.23)
To get to the bottom of the interest in sustainable finance and better understand how investors can genuinely make a positive difference, UZH Magazine interviewed CSP Managing Director Falko Paetzold for their issue on global challenges.
“It's great that sustainable assets have hit the mainstream,” Paetzold says in the article, “but many investors confuse a sustainable rating with environmental impact” and it’s more complex than that. The article goes on to introduce CSP’s work and the Investor’s Guide to Impact in particular, with concrete examples related to water desalination and palm oil.
Find the full article here (01.02.23)
This article for Chief Investment Officer looks at research by Florian Berg and CSP Collaborators Florian Heeb and Julian Kölbel for insight into what effects ESG scores are really having on financial performance.
The piece summarizes takeaways from their paper The Economic Impact of ESG Ratings which looked at the effect of MSCI ratings on stock price. The results? Downgrades in MSCI rating had strong negative effects on stock performance while rating improvements were reflected in stock prices but the increases were slower and not as pronounced.
Read the full article on Chief Investment Officer (26.01.23)
[EN: Research Question about Greenwashing becomes an official recommendation]
In their series on science in the Swiss national Parliament, the Swiss research magazine Horizonte (English: Horizons) reported on the topic of sustainable finance policy in Bern. As they see it, the story is an example of how the work of NGOs, government officials, and researchers can interact.
The article goes into depth on how research–like CSP’s work on how investors can have impact–can come to inform policy. They spoke to CSP Collaborator Julian Kölbel about the opportunities and limitations of ESG investing, and the original question that spurred much of his research: “What are the concrete effects of ESG investments?”
Read the full article (in German) on the Horizonte website (01.12.22)
[EN: Portrait of Falko Paetzold]
This profile of CSP Director and Initiator Falko Paetzold by Adrian Meyer follows Falko’s story from his childhood experiences in East Germany to his research on barriers to sustainable investing during his Ph.D. and through to the work CSP does today. Core to his story is a drive to use the “biggest possible lever” to combat climate change, and the conviction that moving billions of dollars towards impact can make the world a better place.
Read the whole portrait (in German) on Tagesspiegel (17.11.2022)
[EN: ESG ratings don't change anything in the real world]
ESG investments have little real-world impact, as a study by CSP collaborators Julian Kölbel and Florian Heeb shows. It takes years for an ESG rating downgrade to affect share prices, and even then, companies do not respond with appropriate measures to counteract the downgrade. Companies can still effectively ignore ESG ratings. For engaged investors, this means that it will take more than just considering ESG ratings if you want to have an impact.
Read the whole Cash article (in German) here (28.10.2022)
Sustainability Linked Bonds (SLBs) are designed to require companies to meet a set of sustainability goals, which they attach as a condition to the bonds. But SLBs have two major pitfalls. Firstly, companies set and tie targets to SLBs that they have already or almost achieved — meaning that SLBs don't trigger change but are integrated into everyday business. Secondly, companies don’t face penalties for failing to meet their SLB-tied targets, letting them enjoy a “free lunch,” as CSP Collaborator Julian Kölbel and co-authors put it in a recent study. Only time will tell if SLBs will become an effective tool for mitigating climate change, but do we have enough time to find out?
Read the whole Bloomberg article (04.10.2022)
[EN: Sustainable investments: the effect doesn't matter. What counts most is a good feeling]
The good feeling that comes when making a more sustainable choice may matter more for investors than the concrete positive impact of their investments, a new study from CSP researchers has found. The “warm glow” of opting for a more sustainable option doesn’t appear to scale with the amount of impact, leaving investors less willing to pay more for more impact. This good feeling could also be used for greenwashing, the researchers warn. In light of this, implementing universal sustainability standards on the macro level is crucial, as is the responsibility of each impact investor to thoroughly inquire about the impact of the financial product.
Read the whole NZZ article (16.09.22)
Companies may face hidden costs because of social violations when leveling up their environmental standards: when environmental standards go up, social ones tend to deteriorate. "These tradeoffs between environmental and social issues are confounded by investor indifference to the level of impact,” Forbes reckons in light of new research by CSP. CSP researchers concluded that while investors are willing to pay more for “sustainable" investments, they are not willing to increase the amount they pay directly in line with the increase in positive impact. Perhaps surprisingly, this also holds true for the self-identified impact investors in the study.
Read the whole Forbes article (06.09.22)
Market mispricing may not only result from monetary policy mishaps but is also linked to price-insensitive investor capital, passive funds, and momentum investing. A short-term capital market climate may also fail compliance to low carbon emission targets. Following research by CSP, the divergence of ESG ratings may be another contributor, leading to aggregate confusion for all involved. “[…] accountancy captures less and less of what matters in the modern economy such as human capital and the value of data,” says John Plender from FT.
Read the whole article in Financial Times (11.07.2022)
In light of the findings of the research paper ‘Aggregate Confusion: The Divergence of ESG Ratings,’ Susanna Rust discusses the value of ESG ratings with different voices from the industry. She questions whether the divergence of ratings could also be a good thing providing different perspectives on sustainability claims. Furthermore, she discusses whether ESG ratings measure risk or impact and analyzes whom ESG ratings are created for and who actually uses them.
Read the whole IPE article (09.07.22)
What impact does the Russian invasion of Ukraine have on sustainable energy investments? Should investment in national defense be included in ESG regulations? And how to justify the halt of new investment in Russia but not in other countries with dubious environmental and human rights records? The war has again demonstrated that ESG investing does not follow a straightforward moral compass but requires constant calibration. CSP research has suggested that the variation of rating results “makes it difficult to evaluate the ESG performance of companies, funds, and portfolios.”
Read the whole article in Financial Times (06.06.22)
The divergence of ESG ratings creates several challenges. Inconsistent ratings make ESG evaluation difficult and send mixed signals to companies, CEOs and investors. Also, these stark differences require companies and academics to look at multiple ratings in order to get a better picture of a company’s ESG impact. CSP researcher Julian Kölbel and his colleagues from MIT call for rating transparency to solve the problem though FT Alphaville remains skeptical.
Read the whole article in Financial Times (31.05.2022)
Everyone, from investors to consumers, wants to know if the financial product they are buying is sustainable. However, sustainability ratings can differ substantially and create new problems: instead of steering interested investors through the ESG jungle, the many different rating outcomes can create even more confusion, as CSP research has suggested.
Read the whole article on Forbes (19.05.2022)
The MiFID II should help bring clarity and confidence to those interested in pursuing sustainable investing. Unfortunately, according to CSP’s Florian Heeb and Harald Walkate, without some key changes, the current proposals may do exactly the opposite. Heeb and Walkate outline the importance of considering investor motivations and objectives rather than just “preferences”, and identify how the current guidelines could lead to more greenwashing, rather than less. Drawing on research from inside the CSP and beyond, they also make suggestions for what needs to change.
Read the whole ‘Energy Voices’ article on Illuminem.com (27.03.2022)
[Engagement is not just for financial giants]
Investors’ engagement with a company’s management team to clarify their impact expectations is a key part of impact investing, says CSP’s Managing Director Falko Paetzold. Investors need to do their research, bring ideas to the table, and amplify best practices to create impact. On the other side of the equation, company management needs to show interest in sustainability topics and be open to dialogue with its shareholders. In conclusion: involvement can be just as important as money when it comes to creating impact.
Read the whole article about investor engagement in Le Temps (22.03.22)
The market for impact investment consulting is lucrative and growing. So far, however, there is neither a uniform definition nor hard standards for impact-conscious investing, which confuses the market and increases the risk of greenwashing. The diversity of methods for ESG ratings is increasingly becoming a curse for the effectiveness of sustainable investing and unsettles investors who want to create impact, says CSP researcher Julian Kölbel. In research done with collaborators from MIT’s Sloan School of Management, he refers to this issue as “Aggregate Confusion.”
Read the whole article on the confusion surrounding ESG ratings in the Financial Times (19.03.22)
To stop climate change, the economy must become more climate-friendly. Green investment funds are booming, banks are outbidding each other with new products, and record sums are flowing into so-called sustainable investments. In Lugano, guided by CSP experts, a group of ultra-high net worth individuals is learning how to invest their wealth into sustainable projects to create real-world impact. All those who participate here want to change something, for the better.
Watch the documentary trailer in German (with English subtitles) on YouTube (17.02.22)
As companies worldwide pledge to net-zero emissions and more sustainable activities to contribute to a low carbon economy, a fundamental question arises: Who pays for this shift to sustainability? To answer this question, a study, carried out by researchers at the University of Zurich and the Centre for Sustainable Finance and Private Wealth, paired sustainability-linked bonds (SLB) with non-labeled bonds with similar or identical characteristics from the same issuer, and analyzed the differences in yield at issue.
Read the whole article on Responsible Investor (11.02.22)
The ESG ratings business is in its early days, and firms say it's possible to get a good grade from one rater and a poor grade from another. That's partly because raters assign different weights to various ESG metrics, say researchers at the Massachusetts Institute of Technology and the University of Zurich who reviewed ratings across 924 companies.
Read the full article on The Wall Street Journal (13.10.2020)
Die Schweiz ist in Sachen nachhaltige Finanzen bereits Weltmeister - in der Mikrofinanz. Sie kombiniert soziales Engagement und finanzielle Rendite: Investoren geben armen Menschen in Entwicklungsländern Kredite, die ihnen zu einer selbstständigen Erwerbstätigkeit verhelfen. «Es gibt eine wachsende Bereitschaft in der Bevölkerung, etwas Gutes zu bewirken», sagt Kölbel. «Da hat die Mikrofinanz etwas zu bieten.»
Read the full article on Blick (27.09.2020)
Nachhaltige Anlagen sind im Trend, das Investitionsvolumen steigt explosionsartig. The Market geht der Frage nach, was ESG bewirkt und wie es die finanzielle Performance beeinflusst.
Read the full article on the market NZZ (14.09.2020)
Schweizer Finanzinstitute pushen ihre Fonds für die Geldanlage in der Säule 3a. Auch mit dem Thema Nachhaltigkeit. Genaues Hinschauen ist dringend empfohlen.
Watch the interview with CSP's Julian Kölbel on SRF (1.9.2020)
D’importants gestionnaires d’actifs utilisent dorénavant cette approche d’investissement durable, qui consiste à dialoguer directement avec l’entreprise investie, pour demander des changements concrets. Des initiatives collectives d’investisseurs peuvent infléchir certaines stratégies de grandes multinationales cotées.
Read the full article on Le Temps (23.8.2020)
Selon des chercheurs de l’Université de Zurich, les placements éthiques ont peu d’effet sur les entreprises et l’économie. L’engagement vis-à-vis des entreprises est le meilleur moyen de les faire changer, même si les chances sont plus grandes de provoquer des améliorations marginales plutôt qu’une transformation.
Read the full article on Le Temps (9.8.2020)
“Ratings agencies do not always agree, although that’s not necessarily a bad thing,” says Julian Kölbel, an economist at the University of Zurich and a co-author on the MIT paper, “Aggregate Confusion”. “These are value-driven preferences, and it’s normal that not everyone would agree on them.”
Read the full article on Money (16.7.2020)
The growth of sustainable investing is welcome news to those who believe a more conscious allocation of capital can cure society’s pains. A few years ago, sustainable investments were niche products. Now, almost every retail investing outlet offers a wide range of financial products marketed as sustainable. The validity of sellers’ claims is less clear.
Read the full article on Milken Review 19.5.2020
Die Autoren Florian Berg, Julian Koelber und Roberto Rigobon haben die ESG-Bewertungen der führenden Ratinganbieter Asset4, RobecoSam, Sustainalytics und Vigeo Eiris für ein Universum von mehr als 800 der grössten Unternehmen weltweit untersucht und eine durchschnittliche paarweise Korrelation von 0,7 nachgewiesen.
Read the full article on Börsen-Zeitung (25.03.2020)
Investoren können eine entscheidende Rolle bei der Lösung globaler Herausforderungen spielen. Die Auswirkungen nachhaltiger Anlagen auf reale Probleme scheinen jedoch bisher moderat zu sein. Um ihr Potenzial freizusetzen, muss sich dir Branche damit beschäftigen, wie sie Impact im Sinne eines Wandels in der Realwirtschaft erzeugen kann.
Read the full article on Finanz & Wirtschaft 28.3.2020 (PDF, 565 KB)
Geld regiert die Welt – das wissen auch Klimaschützer. Eine neue Generation von Investoren will Konzerne dazu zwingen, sich umweltfreundlich zu verhalten. Kann grünes Geld die Welt retten?
Watch the documentary on ZDF 15.3.2020
"Die Forscher Florian Berg, Julian Köbel und Roberto Rigobon vom Massachussetts
Institute of Technology (MIT) haben versucht, diese Frage zu beantworten. Dazu haben sie die Unternehmensbewertungen von fünf bekannten Nachhaltigkeits-Ratingagenturen miteinander verglichen. Dabei fanden sie heraus, dass mehr als die Hälfte der voneinander abweichenden Ratings auf Messunterschiede zurückzuführen waren, und mehr als 40 Prozent durch die Auswahl unterschiedlicher ESG-Attribute."
Read the full article on Frankfurter Allgemeine 27.2.2020
"One would expect European policymakers to encourage investments in instruments and products that help to scale up sustainable economic activities. For example, a recent review of academic research on the topic concluded that investors’ use of shareholder rights to support environmental resolutions is a “relatively reliable mechanism” for achieving such an outcome."
Read the full article on Eco-Business 3.2.2020
CNN Money asks the big question: Can sustainable investing change the world? CSP's Managing Director & Initiator Dr. Falko Paetzold shares research insights on the challenges and opportunities ahead.
Watch the full program on CNN Money 16.12.2019
Falko Paetzold fled Communist East Germany in the trunk of a Mercedes – today he teaches the super-rich how to invest sustainably. Finews.com met the University of Zurich expert.
Read the full article on Finews 15.1.2020
“Half of overall divergence derives from different weights, the other half from different evaluations within categories,” says Julian Koelbel, one of the co-authors of the MIT paper. “Judgment and opinions vary as a result of these differences.”
Full article on Bloomberg 11.12.2019
CSP's Taeun Kwon gives an overview of sustainable investing, why it is here to stay, and why it is gaining traction especially with next gen investors on an interview on Sibos TV.
Watch the interview here Sibos TV 24.9.2019