Sustainability and responsible corporate management have moved to the centre of entrepreneurial action. This is caused both by customers who have become more aware of the need to consume responsibly, by employees who ask for a purpose in their work and by investors' interest in supporting sustainable businesses via their investment decisions.
Unfortunately, sustainability is still often narrowly subsumed under the heading of "greening the economy". To deliver a sound business case, however, a sustainable corporate strategy needs to consider both environmental, social and governance aspects. At the same time, simply striving for "more" sustainability on each of these dimensions is not necessarily a good strategy for all businesses. Rather, a thorough assessment of the materiality of individual sustainability components is a necessary first step for both management and investors in their decision making. In our different research projects, we try to shed light on these issues. We particularly focus on the question how a sustainable strategy can be effectively and efficiently implemented through a company's processes, risk management and governance structures. Examples include the integration of sustainability key performance indicators in management compensation systems or in bank loans.
The Sustainable Governance Lab aspires to furthering the sustainability transformation by providing robust and insightful academic evidence of the role and effects of corporate sustainability. We offer both research results, hand-collected and original data to help quantify and assess corporate sustainability (e.g. Sustainable Governance Score, Sustainability-Linked Loans Score, Sustainable Remuneration Score) and digital tools to improve the implementation of sustainability strategies and corporate reporting.
We collaborate closely with researchers from different universities, research centers and other institutions. One particular area of joint work is the research project "SATISFY - Scenario Analysis as a Tool for InvestorS, Firms, and regulators on the path to climate neutralitY" where we collaborate with both Frankfurt School of Finance & Management and Deutsches Institut für Wirtschaftsforschung. This work is financed by the Federal Ministry of Education and Research.
Current projects
Quantifying climate-related capital demand for credit risk, 2024, with Sebastian Rink
Climate Risk Integration in Bank Risk Management and Capital Requirements, 2024, with Alix Auzepy
With regard to the question of CSRD reporting according to the ESRS standards, we established a "Financial Materiality Compass" (FMC) as an auxiliary tool. The FMC is meant to be a science-based starting point for firms to base their own, individualized materiality analysis on, it is not a substitute for such an analysis. However, it may also be useful as a compare-and-contrast tool for firms that have already derived a materiality analysis. For a scientific derivation of this tool, please see here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4736435
European corporate sustainability reporting - The Financial Materiality Compass as an auxiliary tool, 2023, with Henry Flach, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4736435
Looking beyond ESG preferences: The role of sustainable finance literacy in sustainable investing, 2023, with Alix Auzepy and Florian Gärtner
Walk the Talk: Shareholders' Soft Engagement on Annual General Meetings, 2022, with Alix Auzepy and Fabio Martin, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4293762
Carbon footprints and equity risk assessments, 2022, with Alix Auzepy, Yannik Bofinger and Björn Rock, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4031824
Corporate ethics programs: Reducing risks or wasting money? Insights from the perspective of investors, 2022, with Yannik Bofinger, Anastasia Bauer and Corinna Ewelt-Knauer, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3382084)
Publications (Selection)
Are sustainability-linked loans designed to effectively incentivize corporate sustainability? A framework for review, (with Alix Auzepy and Fabian Martin) 2023, Financial Management, https://doi.org/10.1111/fima.12437
The risk-return tradeoff: Are sustainable investors compensated adequately? (with Yannik Bofinger and Björn Rock), 2023, Journal of Asset Management, https://doi.org/10.1057/s41260-023-00303-6
Doing Safe by Doing Good: Non-Financial Reporting and the Risk Effects of Corporate Social Responsibility (with Yannik Bofinger and Björn Rock), 2022, European Accounting Review, https://doi.org/10.1080/09638180.2022.2042349
Sustainability-Linked Loans: Effektive Unterstützung der Nachhaltigkeitstransformation durch Kreditfinanzierung (with Alix Auzepy), 2022, ESGZ (Zeitschrift für Nachhaltigkeit und Recht), S. 40-45.
Vorstandsvergütung in DAX- und MDAX-Unternehmen (with Jan Reinschmidt), 2022, Die Wirtschaftsprüfung, Jahrgang 75, S. 639-645
Zooming in on CSR: Which aspects of CSR are relevant for companies’ equity risk? (with Yannik Bofinger and Björn Rock), 2022, Corporate Finance, forthcoming
The sustainability trap: Active fund managers between ESG investing and fund overpricing (with Y. Bofinger, K. Heyden and B. Rock), 2021, Finance Research Letters, https://doi.org/10.1016/j.frl.2021.102160
Corporate social responsibility and credit risk (with Yannik Bofinger and Björn Rock) 2021, Finance Research Letters, https://doi.org/10.1016/j.frl.2021.102052
Effekte guter Corporate Governance - Die Rolle unternehmerischer Transparenz (with Julia Redenius-Hövermann), 2020, Zeitschrift für Corporate Governance, 06/2020, 246-252.
Benford's law and its application to detecting financial fraud and manipulation, 2020 (with Corinna Ewelt-Knauer, Johannes Lips and Peter Winker), in Carol Alexander und Douglas Cumming (Hrsg.): Corruption and Fraud in Financial Markets, Wiley, 473-504.
The gender gap in “Bitcoin literacy” (with Tobias Meyll, Florian Röder and Andreas Walter), 2019, Journal of Behavioral and Experimental Finance, 22, 129-134.
The Glass Cliff Myth - Evidence from Germany and the UK (with Myriam Bechtoldt and Björn Rock), 2019, Leadership Quarterly, 30(3), 273-297.
Content analysis of business-specific text documents: Introducing a German dictionary (with Thomas Pauls and Andreas Walter), 2019, Journal of Business Economics, 89(1), 79-123.
Gender- and education-related effects of financial literacy and confidence on financial wealth (with Milena Schwarz), 2018, Journal of Economic Psychology, 67, 66-86.
Gender differences in financial risk taking: The role of financial literacy and risk tolerance (with Milena Neubert), 2016, Economics Letters, 145, 130-135.
Bewertungsmethoden in der Projektfinanzierung Erneuerbarer Energien – Realoptionsanalyse vs. Kapitalwertmethode, 2016, Zeitschrift für betriebswirtschaftliche Forschung, 68(1), 75-110.