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Our current economic system is based on linear growth and consumption. Our planetary resources however are limited and running out. To keep our planet liveable for both current and future generations, the prevailing paradigm is untenable and asks for change. This, in short, sums up the need for a sustainable economy, to which the financial sector can be a driving force. 

The key driver for sustainable development is integrated thinking. Integrated thinking in finance requires, first and foremost, a mindset that is open to integrate the social foundations and the planetary boundaries into finance. The Platform promotes integrated thinking in finance by combining financial, social and environmental returns.

Dirk Schoenmaker, Academic Director of the Erasmus Platform for Sustainable Value Creation

A growing need for new methods...

Neo-classical finance theory finds it difficult to address sustainability challenges adequately, since the prevalent model is designed to mainly maximize short-term results and to address mostly shareholders. One of the biggest challenges for the financial sector will be to take a more integrated and long-term approach. To truly add value in the long run.

To make the transition towards a sustainable economy

There is a growing need for new methods to incorporate sustainability into asset pricing and valuation. Moreover, corporate governance is making a transition towards long-term value creation as the ultimate goal for corporates. How can research and education promote to such practice? RSM has established a platform to foster thought-leadership and excellence in this field.

Interdisciplinary approach

Addressing these questions requires an interdisciplinary approach. Not only research in finance is needed, but the fields of economics, sustainability, strategic management and law are also connected. Rotterdam School of Management works in close cooperation with the economics and law faculties at Erasmus University to deliver such integrated thinking.

A hub to provide meaninful debate and insights

The purpose of this platform is to develop new insights through research and education in close collaboration with leading sustainable finance players in the industry and academia. The platform brings together academic faculty research, PhD, Master and Bachelor students, MBAs and executive education, NGOs and professionals in the financial industry.

Who we are


Nathan de Arriba-Sellier

Mathijs van Dijk

Portrait of Matthijs van Dijk

Dirk Schoenmaker

Portrait of Dirk Schoenmaker

Dieuwertje Bosma

Portrait of Dieuwertje Bosma

Advisory board

Jaap van Dam

Portrait of Jaap van Dam

Tjeerd Krumpelman

Portrait of Tjeerd Krumpelman

Cindy van Oorschot

Portrait of Cindy van Oorschot

Hans Stegeman

Portrait of Hans Stegeman

Merel Hendriks

Portrait of Merel Hendriks

Willem Schramade

Hesse McKechnie

Portrait of Hesse McKechnie

Werner Schouten

Werner Schouten

Arjan Udding

Portrait of Arjan Udding

Academic members

Abe de Jong

Portrait of Abe de Jong

Dion Bongaerts

Portrait of Dion Borgaerts

Karen Maas

Mathijs van Dijk

Portrait of Mathijs van Dijk

Dirk Schoenmaker

Portrait of Dirk Schoenmaker

Willem Schramade

Portrait of Willem Schramade

Gianfranco Gianfrate

Portrait of Gianfranco Gianfrate

Mathijs Cosemans

Portrait of Mathijs Cosemans

Steve Kennedy

Portrait of Steve Kennedy

Emilio Marti

Portrait of Emilio Marti

Marta Szymanowska

Arjen Mulder

Portrait of Arjen Mulder

Thomas Bauwens

Henk Jan Reinders

Saskia Kohlhase

Erik Peek

PhD students

Annebeth Roor

Portrait of Annebeth Roor

Xander Hut

Portrait of Xander Hut

Eline ten Bosch

Portrait of Eline ten Bosch

Martin Fuchs

Portrait of Martin Fuchs

Marloes Hagens


The Erasmus Platform for Sustainable Value Creation is partner-driven and works with the following partners:

The Platform develops new insights and concepts to foster sustainable value creation in practice and to overcome hurdles. These new concepts are developed in close collaboration with industry partners. The ultimate goal is to advance sustainable development through stimulating best practices in sustainable value creation. Our current partners are: 

NWB Bank
Triodos Investment Management
Impact Institute
Impact Economy Foundation 

The Platform collaborates with the leading service providers in the total value and sustainable value creation methodologies. New advances in methodology will be developed in co-creation. 

The Platform works with leading external academic partners in the field of sustainability (for example, the Sustainable Finance Lab, Smith School of Enterprise and the Environment at Oxford University). It draws on leading researchers and teachers within Rotterdam School of Management and the wider Erasmus University. Master, PhD and post-doctoral students are key in setting up new projects.

Reporting 3.0
Sustainable Finance Lab
True Price

The Platform is also closely connected to other important governmental organizatons.


Would you like to join our platform or get in touch with us? Please contact Dieuwertje Bosma, project manager of the platform. 

Join our online course "Principles of Sustainable Finance"

Our work

Working paper series

The working paper series by the Erasmus Platform for Sustainable Value Creation are set up with the idea of informing financial and sustainability managers about new (scientific) insights in the field of sustainable finance. They are free to download and are all accompanied by a non-technical summary. 

The Erasmus Platform for Sustainable Value Creation is part of RSM's broader mission of being a porce for positive change. It is RSM's conviction that business can and should play an instrumental role in the transition to a more sustainable world in which both current and future needs are met. The Platform for Sustainable Value Creation aims to strive towards a more sustainable financial sector, through research, co-creation and meaninful debat. We create a platform in which both academics, business, students and other professional parties act together. 

Download our working papers

This working paper provides an integrated strategic asset allocation (SAA) framework. This framework which provides a basis for institutional investments to integrate sustainability related considerations in the important first steps of SAA, where they determine in which asset classes to invest in. The framework integrates transitions, such as the energy transition and the food system transition, into macro-economic expectations that are the basis of SAA. You can download the paper here

This paper documents that the stock prices of firms with higher carbon emissions respond more to monetary policy shocks around Federal Open Market Committee announcements, especially among firms that are more capital intensive, with lower ESG ratings, or with greater regulatory risk exposures. Examining real effects, we find that high-emission firms reduce emissions relative to low-emission firms, but disproportionately slow down these efforts when monetary policy is restrictive. Our results indicate that monetary policy has a stronger effect on the financial and environmental performance of firms more exposed to carbon transition risk, irrespective of whether central banks embrace a climate target. You can download the paper here.

We aim to provide the most comprehensive analysis to date of the relation between ESG ratings and stock returns, using 16,000+ stocks in 48 countries and seven different ESG rating providers. We find very little evidence that ESG ratings are related to global stock returns over 2001-2020. This finding obtains across different regions, time periods, and ESG (sub)ratings, and also for ESG momentum. We further find little empirical support for hypotheses from the literature on the role of ESG uncertainty and of country-level ESG social norms, ESG disclosure standards, and ESG regulations in shaping the relation between ESG and global stock returns. Overall, our results suggest that ESG investing did not systematically affect investment performance during the past two decades. You can download the paper here.

This case study gives an external perspective on the integrated value of Inditex for educational purposes. Integrated value combines financial, social and environmental value in an integrated way. This case study applies the methodology in Corporate Finance for Long-Term Value to calculate integrated value. You can download the paper here.

We conceptually review Climate Risk Stress Testing (CRST) approaches to assess the impact of climate-related shocks on financial system stability. We distinguish between climate, economic, and financial modeling steps, and identify six types of climate shocks and four different approaches (macro-financial, micro-financial, non-structural, and disaster risk). You can download the paper here.

There is a heated debate on shareholder versus stakeholder governance. This paper develops an integrated model of corporate governance including current and future stakeholders, building on an integrated measure for corporate value. You can download the paper here.

Optimising for financial value alone puts the long-term viability of a company at risk Organisations and their management need an interpretation of ‘value’ far broader than simple financial value if they want their business to thrive – or even survive – in a world tested by environmental and societal shifts. The decision in where and how to invest must take other values – societal and ecological values – into consideration. You can download the paper here.

This study aims to provide an overview of the current state of affairs of the practice of engagement in relation to biodiversity. We aim to answer the question: How can financial institutions effectively engage on the topic of biodiversity? You can download the paper here.

The central question in this paper is whether a market economy can theoretically and empirically deal with sustainability. A system analysis of the current neoclassical theory shows that the system components (goal function, interaction mechanisms, actors and outcomes) are predominantly defined in terms of economic growth and facilitated by market exchange. This fosters (over)production and consumption of private goods, crowding out public goods and preservation of the commons. The one size fits all ‘economic mechanism design’ cannot deliver societal outcomes regarding sustainability. You can download the paper here.

This report is a reflection of the deliberations of the Biodiversity Working Group set up under the auspices of the Sustainable Finance Platform. The working group consists of Actiam, APG, ASN Bank, a.s.r., FMO, Rabobank, Robeco, Ministry of Agriculture, Nature and Food Quality, Erasmus University Rotterdam and is sponsored by NWB Bank. You can download the paper here.

Future-oriented companies manage for integrated value rather than merely for shareholder value to earn their social license to operate. Managing for integrated value involves managing and balancing several types of value (financial, social and environmental) at the same time, often involving trade-offs. Companies need decision rules that help them make investment decisions accordingly. This article derives model-based decision rules for integrated value. The decision model allows for the prioritisation of specific types of value, in line with a company’s purpose. The decision model is tested with several investment projects. It appears that companies can improve their integrated value with the new decision model. Read the full publication here

This paper presents evidence of a bias towards carbon-intensive companies in popular value-weighted stock market indices that are tracked by index funds and ETFs and serve as benchmark for active equity strategies. The carbon intensity of the U.S. and European market indices is 70% and 90% higher than that of the U.S. and European economy, respectively. The carbon bias is problematic because it exposes institutional investors such as pension funds to carbon-transition risks and is at odds with their drive towards sustainability. We therefore explore several strategies for investors to mitigate the carbon bias in their equity allocation. Read the full paper here.

Worldwide, nature is deteriorating and with this the planet has suffered a great loss of biodiversity and ecosystem services (MAE, 2005; IPBES,2019). The main cause behind the degradation is the expansion and intensification of agriculture (Maxwell, et al., 2016; Benton et al., 2021).

This paper elaborates on four big trends that have taken place within the agricultural sector which have contributed to the degradation of soil and biodiversity. The paper proposes a solution to the issue by calling on the role of banks, as the current mainstream agricultural model is highly capital-intensive. Lastly, the researchers introduce some alternative production models that are already being developed, but in order to thrive these farming models require more scientific, policy and financial support to thrive. Read the full paper here.

Transition management and corporate finance are separate disciplines. This article connects the two disciplines by developing a model of expected transition losses. It appears that adaptation to transition is a key determinant of a company’s long-term value. Companies that are early in the game can reap the first mover benefits. Companies that adapt later experience higher adaptation costs and may even not survive. The transition model helps companies to sharpen their strategy and cope with major sustainability transitions that are currently happening. 

The transition model can also be applied by investors and policy-makers. Investors can engage with companies on the quality of management and their adaptability to unlock long-term value potential. But when companies are too much behind, investors may divest from these companies. For policy-makers, the transition model indicates that subsidies can accelerate companies that have strong management and are early adopters in the transition. By contrast, subsidies for laggards are not very effective. Read the full paper here.

We study the relation between a country’s performance on the United Nations’ Sustainable Devel- opment Goals (SDGs) and its sovereign bond spread. Using a novel country-level SDG measure for a global sample of countries, we find a significantly negative relation between SDG performance and credit default swap (CDS) spreads, while controlling for traditional macroeconomic factors. The results indicate that countries with better SDG performance have lower borrowing costs. This provides an incentive for countries to invest in SDGs. Read the full paper here. 

Across the globe people are continuously affected by business activity. Along with that, issues related to human rights abuse by businesses arise. In light of states’ duties to protect there has been a shift from voluntary to mandatory human rights due diligence. Hence, there are clear expectations towards investors, who are part of the institutional context in which companies are held accountable for human rights in their value chains. Nevertheless, investors’ human rights performance is lacking and human rights abuses persist among investee companies. This paper names four reasons why human rights abuses still persist at investee companies and identifies some factors that may be hindering investors in successfully protecting human rights. Furthermore, this paper suggest that the field of Business and Human Rights (BHR) might play an important role in alleviating some of the issues related to human rights abuses. Also, it emphasizes the importance of a joint effort between specialized human rights data gatherers and specialized human rights investors, in order to fill the gap. Read the publication here.

Climate-aware institutional investors are assumed to a!ect the transition towards a low carbon economy by exercising their prerogatives as owners of global companies. Investors concerned with climate change can influence investee companies’ carbon footprint by voting at shareholder meetings on climate-related issues and by actively engaging with executives and board members. This paper studies"to what extent institutional investors’ ownership a!ected corporate carbon emissions in 68 countries for the period of 2007 to 2018. 
Results show that institutional investment on average does not appear to lead to a carbon footprint reduction. However, institutional investors are associated with a limited reduction of carbon footprint for the highest polluters in the sample. These results suggest that 
climate-driven responsible investors can complement but not substitute national and international climate policies. Read the publication here

Future-oriented companies manage for long-term value creation (LTVC) rather than merely for shareholder value or stakeholder value. Managing for LTVC involves managing and balancing several types of value (financial, social and environmental) at the same time, often involving trade-os. Companies need to have decision rules that help them make investment decisions accordingly. This article derives such decision rules. Read the full paper (English), or go to the Dutch version.

Sustainability is about strategy as much as it is about risk. Many would agree on that, but still find it difficult to act on it. Companies in virtually every industry already feel the impact of disruptive and complex new societal trends: Climate change, the energy transition, social inequality, biodiversity loss, and so on. 

Some companies approach sustainability as a strategic matter, rather than just a matter of risk. They move away from shareholder primacy and focus on long-term value creation - for all stakeholders. What can we learn from those companies? Every company is unique and will face different dilemmas en different opportunities. There is not 'one' optimal strategic approach in sustainability. We cannot simply formulate 'one' playbook to set the rules for everyone. 

But there are some lessons to draw from various companies that are currently leading the way and have begun to formulate new pioneering strategies on sustainability. This paper captures examples of these new strategies and deducts a model of long-term value creation. It shows how companies can set their strategies accordingly. Financial institutions can draw on the model to assess how future proof their investment and/or lending portfolios are.

Read the full paper.

A substantial amount of research indicates a positive relationship between a firm’s sustainable policies and its value. Nonetheless, few studies manage to identify why sustainability would translate into better financial performance. This paper suggests that firms operating in more sustainable sectors can afford to pay lower wages, due to workers’ preferences for sustainable jobs. This so-called Sustainability Wage Gap is increasing over time and larger for high-skilled workers with non-cognitive skills. As a result, firms can attract and retain talented workers and remain competitive by accommodating workers’ sustainability preferences. Download the full paper.

RSM’s Series on Positive Change was launched with the aim of informing managers about trends we consider to be important in the future, and about opportunities for business to contribute to positive change. They are free to download. The fourth edition on 'Finance in transition' was written by our Platform's members Dirk Schoenmaker, Willem Schramade and Derk Loorbach. Download the full paper.

While academic research is increasingly focused on sustainable finance, little is known about the rationale for sustainable investing. Our study utilises the COVID-19 shock to study investor preferences during the first major economic crisis since the substantial rise in sustainable investing in recent years. We find that funds scoring high on ESG factors receive higher than average fund flows prior to the pandemic-induced market crash, while this relatively high inflow disappears after the onset of the crash. Our results suggest that investors perceive ESG as a luxury good that is no longer affordable under the financial stress induced by the COVID-19 shock. Download the full paper.

Green bonds are an increasingly popular form of financing. Currently, however, green bonds are issued separately from regular bonds, increasing transaction costs. Moreover, green bonds lack transparency and are often used to finance existing projects, instead of stimulating new initiatives. As a consequence, green bonds allow firms to engage in window-dressing or greenwashing. As a solution, we propose that green bonds are split into regular bonds and green certificates. This ensures that market prices reflect the environmental performance of the bonds, reduces financing costs through increased liquidity, and incentivises new environmentally friendly projects. Download the full paper.

The choice of governance for the economy and for the corporate sector cannot be studied in isolation. Corporate governance must fit within the broader economic system to be successful. Therefore, this paper introduces the impact economy, an economic system in which institutions focus on financial, social and environmental returns. As such, businesses can create long-term, integrated value. However, the shift to an impact economy comes with numerous challenges. It is therefore important that the financial sector takes a stewardship role and encourages companies to adopt sustainable business practices. Download the full paper.

This report’s key aim is to provide an overview of available approaches to assess the degree of climate risk in investment portfolios, with a particular emphasis on pension funds. I discuss the key methods underlying a number of the most prominent approaches used by the financial industry, by policy institutions, and in the academic literature, and reflect on their main advantages and disadvantages. I also touch upon the relevant regulation for Dutch pension funds, the various data sources available to support climate risk assessments, as well as potential approaches to mitigate climate risk in investment portfolios. Download the full paper.

To meet the Paris climate goals, we need serious environmental and energy transitions. Financing those transitions will require both the financial and the public sector to transcend business-as-usual and take on new roles and structures in this system change. Current financial practice lacks the structures to deal with local initiatives, and has a narrow focus on financial return calculations. For their part, subnational governments often lack the knowledge to take that role. This gap can be filled by adopting investment criteria based on integrated value, by educating students and practitioners on transitions and systems thinking, and by creating new structures that are
adapted to local conditions, with active roles for city and regional governments. You can read the working paper here

There is increasing interest in assessing the impact of climate policies on the value of financial sector assets, and consequently on financial stability. Prior studies either take a “black box” macro-modelling approach to climate stress testing or focus solely on equity instruments – though banks’ exposures predominantly consist of debt. We take a more tractable finance (valuation) approach at the industry-level and use a Merton contingent claims model to assess the impact of a carbon tax shock on the market value of corporate debt and residential
mortgages. We calibrate the model using detailed, proprietary exposure data for the Dutch banking sector. For a €100 to €200 per tonne carbon tax we find a substantial decline in the market value of banks’ assets equivalent to 4-63% of core capital, depending on policy choices. You can read the paper here

Many companies talk about their social and environmental contributions, but very few make them visible. This is typically attributed to lack of methods and data. But ABN AMRO has taken the bold step to produce insightful impact statements, including an Integrated P&L, which show that it can be done. This case study analyses how ABN AMRO got to produce its Impact Report, what is in there, and what its impact could be. The main obstacles seem to be mindsets rather than data and methods. You can download the case study here.

This paper develops a new framework for sustainable finance. Financial institutions have started to avoid unsustainable companies from a risk perspective, which we label as Sustainable Finance 1.0. in Sustainable Finance 2.0, financial institutions look for companies that balance the financial, social and environmental goals. The frontrunners are mission driven and invest in and lend to sustainable companies that create long-term value for the wider community (Sustainable Finance 3.0). The new framework allows us to develop an indicator to assess how deep sustainable finance is. While general reports suggest a large increase in sustainable investing and banking, our empirical findings suggest that the financial system is just above, but still quite close to, Sustainable Finance 1.0. Read the paper here

The Social Impact Fund Rotterdam represents an interesting financial innovation: place-based impact investing in close cooperation with public and private partners.

Place-based impact investing refers to impact investing that is focused on one particular city or region, with the advantages of being a local investor, which include better risk assessment, networks, and “boots on the ground”. These advantages should help overcome some of the problems associated with standard impact investing. This article explores how this form of place based impact investing has come about, how it works, and how it deals with the challenges of impact investing, such as effectiveness, measurement, the balance between financial and impact returns, and the allocation of societal costs and benefits. You can read the working paper here

This case study offers a list of questions that allow analysts to integrate sustainability into investment analysis by connecting sustainability to business models, competitive position, strategy and value drivers. For illustrative purposes, the questions are answered for McDonald's. The case highlights the need for fundamental analysis to properly assess a company’s transition preparedness. You can read the case study here.

This case study offers a list of questions that allow analysts to integrate sustainability into investment analysis by connecting sustainability to business models, competitive position, strategy and value drivers. For illustrative purposes, the questions are answered for Air France-KLM. The case highlights the need for fundamental analysis to properly assess a company’s transition preparedness. You can read the case study here.

This case study offers a list of questions that allow analysts to integrate sustainability into investment analysis by connecting sustainability to business models, competitive position, strategy and value drivers. For illustrative purposes, the questions are answered for Royal Philips, an advanced company in terms of sustainability reporting and thinking. The case highlights the need for fundamental analysis to properly assess a company’s transition preparedness. You can read the case study here

Central banks have already started to look at climate-related risks in the context of financial stability. Should they also take the carbon intensity of assets into account in the context of monetary policy? The guiding principle in the implementation of monetary policy has been ‘market neutrality’, whereby the central bank buys a proportion of the market portfolio of available corporate and bank bonds (in addition to government bonds). But this implies a carbon bias, because capital-intensive companies tend to be more carbon intensive. This working paper investigates how low carbon allocation can be done without undue interference with the transmission mechanism of monetary policy. Read the paper here.

Creative discovery and technological innovation fluctuate across time and space: it is difficult to find patterns. Research by Mathijs van Dijk from RSM and Carsten de Dreu from Leiden University suggests that climate shocks and periods of prolonged decreased temperature have an effect. In short: the colder it is, the more scientific discoveries and technical innovation takes place. You can download the working paper here.

Cost of capital is a key element for corporate finance and investment decisions. Global companies and investors are increasingly treating environmental and social risks as a key aspect when making investment and financing decisions, pricing financial assets, and deciding on the allocation of their investment portfolios. Consequently, there is a growing realisation that better environmental (or sustainability) performance results in a reduced cost of capital. CFOs may thus be interested in improving the sustainability profile of the company. Read the article here.

Companies are increasingly adopting the goal of long-term value creation, which integrates financial, social and environmental value. However, investors struggle to invest for long-term value and perform the social function of finance. In this paper, we examine the set of issues that make this problem so stubborn and we outline the contours of an alternative paradigm that is better able to pursue long-term value creation. You can download the paper here.

Do you want more information about the Erasmus Platform for Sustainable Value Creation and the working paper series? Please contact Dieuwertje Bosma, project manager of the platform.

Student Theses

The student theses series by the Erasmus Platform for Sustainable Value Creation are set up with the idea of offering a podium to outstanding student theses on sustainable finance. They are free to download and are all accompanied by a non-technical summary. 

The Erasmus Platform for Sustainable Value Creation is part of RSM's broader mission of being a porce for positive change. It is RSM's conviction that business can and should play an instrumental role in the transition to a more sustainable world in which both current and future needs are met. The Platform for Sustainable Value Creation aims to strive towards a more sustainable financial sector, through research, co-creation and meaninful debat. We create a platform in which both academics, business, students and other professional parties act together. 

Download our student theses

The growing significance of ESG disclosure for investors means that the problem of asymmetry of ESG information between firms and investors is becoming more pronounced. This study aims to determine whether science-based targets are a type of ESG disclosure which can reduce information asymmetry, by analysing the effect that science-based targets adoption, as well as target achievement and difficulty, have on a firm’s market- based financial performance. Read the full thesis here.

In the Living Management Cases students from the Rotterdam School of Management (RSM) Honours Programme are invited to study society’s most pressing problems, in this case the sustainability of the agricultural sector. The students were given nine real credit applications of farmers who were looking to make the transition from conventional to organic farming. Three banks (Rabobank, ABN AMRO and Triodos Bank) provided five diary cases and four crop cases. The students used these cases to calculate the ‘integrated value’ of each of these cases using the True PriceTM methodology. The documents can be found below: 


With temperatures increasing and sea levels rising, enterprises and investors play an important role in reducing emissions and accurately pricing the risks associated with emitting. This study examines the e!ect of carbon performance on cost of debt by analysing panel data of 2,737 enterprises operating in Europe and the United States for the period from 2013 to 2019. Read the full thesis

The level of diversity around the world has rapidly deteriorated in recent years. Numerous species have already gone extinct and many more are set to go extinct if the current trends persist. With businesses playing a large role in this deterioration, organisations increasingly face pressure to measure and reduce their ecological footprint. Nonetheless, there are few studies that focus on resilience thinking as a pillar of biodiversity impact measurement. This study aims to close this research gap. Download the full paper.

Eden Holland is a theme park, science centre, living lab and museum all in one. The park aims to provide insight, inspiration and encouragement to its visitors to contribute to a sustainable society. Consequently, this research project quantifies the impact of five sustainable initiatives, which visitors of Eden Holland could implement in their daily lives. These include reducing the use of fast fashion, meat consumption, travel and energy and using more sustainable energy resources. The project shows that, for the average person, reducing the frequency with which one travels is most impactful. Download the project report.

Restoring degraded landscapes is essential to guaranteeing the ecosystem services landscapes provide for future generations. Although promising, these initiatives primarily involve the public and civic sector and depend heavily on public and philanthropic funding. This paper analyses seven initiatives in which stakeholders collaborate to blend investments for LRPs. You can read the thesis here

Firms, investors and other stakeholders have come to understand the importance of social, environmental and governance (ESG) issues in the world. This has led to a boom in the number of sustainable funds, investors integrating ESG factors in their analyses and UNPRI signatories. So far though, there has been limited academic research regarding which ESG factors have material impacts on firms. This is conflicting as investors state that the prime reason for considering ESG factors is that they believe it has a material financial impact on investment performance. Many corporations are publishing materiality matrixes within their sustainability reports, because this information gives insight into the risks and opportunities that the firm faces. As these material factors are presumably influencing firm performance, it is key for investors to gain a better understanding of these factors and their impacts. RSM-graduate Kelly van Heijningen did a study on this topic. Read the full working paper here.


Although the Sustainable Development Goals (SDGs) have received much attention since initiation, the challenge on how to turn these goals into investment decisions remains. This working paper is based on empirical research of two asset managers that each have an SDG investment strategy where they integrate the SDGs in investment decisions. This research has two implications. First, it shows that SDG information is fundamentally different than ESG information, in that it directs attention to the world’s social and environmental challenges and hence, gives a renewed focus on business’ products and services. The second implication relates to the development of SDG investing in light of the limited attention that investors have. Developing specific ‘SDG ratings’ might take long to develop and in the end
provide investors with information that have the same issues as ESG ratings. You can read this paper, written by RSM graduate Annebeth Roorhere


Corporate Finance for Long-Term Value

This open access textbook offers a guide to corporate finance for modern companies that want to create long-term value. Drawing on recent literature on sustainable companies, it starts by analysing the Sustainable Development Goals as a strategy for the transition to a sustainable economy. Next, it translates the general concept of sustainability into core corporate finance methods, such as net present value, company valuation, cost of capital, capital structure and M&A. Current corporate finance textbooks are primarily based on the shareholder model, designed to maximise financial value.

This book instead adopts the integrated model, which argues that companies have to serve the interests of their current and future stakeholders. Accordingly, companies move from simply maximising financial value to optimising integrated value, which combines financial, social and environmental value. Applying this new paradigm of integrated value is the truly innovative feature of this textbook. Written for undergraduate and graduate students of Finance, Economics, and Business Administration, this textbook provides a fresh analysis of corporate finance.

Combining theory, empirical data and examples from actual companies, it reveals the sustainability challenges for corporate investment and shows how finance can be used to steer funds to sustainable companies and projects and thus accelerate the transition to a sustainable economy.

Visit the publisher’s website for the complete open-access book.


Find the slides in different formats below. 

We are working on adding these as soon as possible. 

Valuation models

Decision making models

Integrated Value case studies:

Value Driver Adjustment case studies:

Principles of Sustainable Finance

Finance is widely seen as an obstacle to a better world. Principles of Sustainable Financeexplains how the financial sector can be mobilized to counter this. Using finance as a means to achieve social goals we can divert the planet and its economy from its current path to a world that is sustainable for all. 

Written for undergraduate, graduate, and executive students of finance, economics, business, and sustainability, this textbook combines theory, empirical data, and policy to explain the sustainability challenges for corporate investment. It shows how finance can steer funding to certain companies and projects without sacrificing return and thus speed up the transition to a sustainable economy. It analyses the Sustainable Development Goals as a strategy for a better world and provides evidence that environmental, social, and governance factors matter, explaining in detail how to incorporate these factors in the corporate and financial sectors.

Tailored for students, Principles of Sustainable Finance starts each chapter with an overview and learning objectives to support study. It includes suggestions for further reading, lists and definitions of key concepts, and extensive uses of figures, boxes, and tables to enhance educational goals and clarify concepts. Visit the publisher's website for more information


Our three case studies offer a list of questions that allow analysts to integrate sustainability into investment analysis by connecting sustainability to business models, competitive position, strategy and value drivers. For illustrative purposes, the questions are answered for Royal Philips, Air France - KLM and McDonald's, three companies with very different sustainability challenges. The cases highlight the need for fundamental analysis to properly assess a company’s transition preparedness. 



The Erasmus Platform for Sustainable Value Creation engages in several projects with their partners. Most of them are research projects. Below you find all our projects and the outcomes. Curious to discuss this with us? Please send us an e-mail via the contact form. 

Transitioning the financial system

The need for change within the financial world is the key focus of the publication “Value for money”, which summarises the findings from four transition discussions with a group of experts in and around the Dutch financial system. These so-called transition arenas were facilitated by DRIFT, the transition-institute of the Erasmus University, and the Sustainable Finance LAB.

The document first outlines why the financial system needs changing and then delves into four core problems (narrow focus, backward-looking risk, wealth inequality, and compartmentalization/specialisation), which are defined as the “dark side” of the system. In addition, the report offers three fundamental principles for the future of the system and looks at disruptive change processes and the desired transition pathway.

Download the publication below or through this link. Please note that the report is in Dutch.

Investing, the SDG's and impact measurement

Financial institutions are increasingly adopting the UN Sustainable Development Goals as guidelines for their investment and lending decisions. A relatively new approach in sustainable investing and lending that looks at outcomes (SDG’s) instead of inputs (ESG factors). The UN SDG’s form a common language and understanding of the global environmental and social challenges. The framework is broad yet comprehensive. As such however, it also considers a broad spectrum of topics that are not (yet) easily quantifiable and subsequently also poorly measurable. This research project is a collaboration between the Platform, ASN Bank, MN, NWB Bank, Rabobank and Robeco. At each of the parties, a specific SDG-related research question is formulated. These cases together will lead to a broader understanding of how the SDG's can be used in investing and how subsequent positive and negative impact can be measured. 

A guideline on the use of deforestation risk mitigation solutions for financial institutions

This case study focuses on the relationship between investing and deforestation. Global forest covers continue to decline at unsustainable rates. The destruction of forests directly and indirectly affects natural habitats, the climate, communities and businesses. As governments and consumers shift towards more sustainable practices, companies will have to adjust their business models. Consequently, the value and profitability of investments that do not take deforestation and related sustainability issues into account may decrease. Financial institutions can no longer ignore the risks associated with a deteriorating planet. The aim of this paper, written in cooperation with the Sustainable Finance Platform of the Nederlandsche Bank, is to provide financial institutions with actionable steps to analyse and mitigate their impact on deforestation. You can read the paper here.

SDI Optimization

This paper examines investing in the Sustainable Development Goals (SDGs), or in other words, Sustainable Development Investments SDIs). Since the SDGs were introduced in 2015, SDIs have developed into a sustainable investing practice at different institutional investors and asset managers. As such, they are one of the methods of socially responsible investing (SRI), which I consider to be equivalent to the Dutch term ‘maatschappelijk verantwoord beleggen’. The leading question of this case study is the following: How can MN and its clients optimize their exposure to SDIs given their financial objectives and their position in the pension system? You can read the paper here.

Biodiversity, risks and opportunities for the financial sector 

By 2020, the world is supposed to achieve the Aichi Biodiversity Targets, and a zero draft for post-2020 targets has already been set-up (Convention on Biological Diversity, 2020). The 20 Aichi targets, created in 2010 and signed by 194 countries, have the purpose of aligning the global community in the fight against biodiversity loss. The first target states that people have to be “aware of the value of biodiversity and the steps they can take to conserve and use it sustainably” (Convention on Biological Diversity, 2018). This paper, written in cooperation with the Sustainable Finance Platform of the Nederlandsche Bank, aims to increase awareness of biodiversity amongst financial institutions, thereby contributing to achieving the Aichi targets. You can read the paper here

In this case study, our researcher focuses on the topic food security. The first report will be published soon. 

Committed shareholders project

Shareholders are of great influence on companies. In the transition to a sustainable economy, companies and institutional investors are increasingly adopting the goal of long-term value creation, which integrates financial, social and environmental value. How can institutional investors, as committed shareholders, support sustainable companies and work jointly on the long-term agenda? In the pursuit of long-term value creation, investors and companies face several dilemmas. The aim of this research project is threefold. First, establish the facts on institutional shareholdings in companies. Second, identify dilemmas for investors and companies and third, explore pathways for long-term-alignment between investors and companies. 

This report summarises the institutional ownership data of the companies in the AEX index. The main goal of the report is to create an overview of the presence of institutional investors in the ownership of Dutch large-cap companies. This report relates the data obtained to the reality of the Dutch asset management industry and lists the implications for institutional investors. Download it here

This paper finds that investors use a variety of methods for long-term value creation, including positive and negative screening, concentrated portfolios, active ownership, and collaboration with other investors. The main barriers to long-term investing are overreliance on benchmarking and passive portfolios, lack of alignment within the investment chains, and short-term performance incentives in the industry. Those are exacerbated by the lack of reliable sustainability data and the decoupling of investment processes from ESG engagement. Download the paper here.

This report presents data on the geographic segmentation of the companies in the AEX index, the Dutch stock index of the 25 most frequently traded securities on Euronext Amsterdam. This report aims to give an overview to investors of the international diversification of large Dutch multinational companies’ operations. Download it here.

Building on previous studies in which we disentagled the several interrelated obstacles that investors and company management face with long-term sustainable alignment, this paper, expands and searches for practicable solutions. The goal is to find an appropriate model that enables management of companies to engage in long-term value creation with support and trust of its investors, while keeping market discipline of management. Download the report here.

On 5 November 2019, the Platform hosted an executive dinner as part of the project on 'Committed Shareholders'. Leading AEX-companies and institutional investors sat at the table to discuss how long-term commitment between investors and companies can be strengthened. Prior to the evening, an introduction paper was written and sent around. The discussion was very fruitful. You can read the key take-aways here


The Erasmus Platform for Sustainable Value Creation produces various publications. Our yearly overview study on climate change finance is one example. On this page you will find all our publications. 

Climate change finance: insights from research

This is an overview of the effects of knowledge about climate change in the financial sector. Research into climate change and finance is a growing field, and the findings of such research have increasingly important implications. Six key papers in different areas of finance that are affected by climate change are discussed in this booklet: banking, institutional investing, portfolio returns, real estate and long-term investments, and corporate finance. Our reviews emphasise the essence of each investigation and bridge the gap between theoretical knowledge and practical action. We also provide indications for the future of finance-climate change research.


This is an overview of the effects of knowledge about climate change in the financial sector. Research into climate change and finance is a growing field, and the findings of such research have increasingly important implications. Six key papers in different areas of finance that are affected by climate change are discussed in this booklet: banking, institutional investing, portfolio returns, real estate and long-term investments, and corporate finance. Our reviews emphasise the essence of each investigation and bridge the gap between theoretical knowledge and practical action. We also provide indications for the future of finance-climate change research. Download it here.

This year’s publication showcases some of the most sophisticated (global) sustainability research and explains the relevance for the business world. We present a concise overview of the sustainable finance topics that help to quantify risks, look for effective (new) governance mechanisms and a change of mindset. The topics cover: supply chain sustainability, active ownership, sustainable development goal contribution and corporate governance and sustainability. You can read the publication here.

Blog archive

Find the archive of Erasmus Platform for Sustainable Value Creation blogs below.

Together with the financial sector, the Erasmus Platform for Sustainable Value Creation aims to enhance knowledge of sustainable finance. Its Academic Director and Professor of Banking and Finance Dirk Schoenmaker  explores the link between economic governance and corporate governance.

The current economic system is largely geared towards maximising economic growth but might hold companies back in their attempts to balance profit and impact. Corporate governance must fit within the broader economic system to be successful. Prof. Schoenmaker identifies which governance systems are conducive to sustainable outcomes.


How can our economic system for the production of public and private goods achieve  sustainable development? In the market economy, the government is exclusively responsible for public goods, while companies produce private goods. The market economy is capable of delivering economic growth and profits, but brings social inequality and economic degradation.

By contrast, in a state economy, the state is ultimately responsible for producing public and private goods, but this comes at the cost of efficiency and individual development.

The impact economy takes the middle ground (Schoenmaker, 2020). While the government produces classic public goods, the government and companies care about the common good of sustainable development. They do so by balancing profit and impact. Lima de Miranda and Snower (2020) promote a balanced dashboard of economic, social and environmental indicators to evaluate current and future well-being.

It appears that the impact economy model is well-positioned to find that balance with appropriate achievements across all three pillars: economic, social and environmental. This is translated into higher scores at country level for achieving the UN’s Sustainable Development Goals (SDGs), and higher CSR scores at company level. The market and state economy models achieve economic growth, but with far lower scores on the social and environmental pillars.

The challenge is to stay away from perceived trade-offs, for example, between growth and environmental protection or social inclusion (Kallis et al., 2018). The idea is that all three dimensions – growth and/or profit, social, and environmental – should all become focal points and be properly balanced by governments and companies in the pursuit of long-term sustainable development.

In the impact economy model, steering the economy changes from stimulating GDP to enhancing broad welfare, which includes well-being and sustainability (Stiglitz, 2009). Companies transform from profit-maximising entities into purpose-driven organisations (Mayer, 2018; Edmans, 2020). Decision-making by governments and companies is no longer based only on economic and financial factors, but also on social and environmental factors.

The defining criterion of the impact economy is taking a broad approach in government policy-making and in corporate decision-making covering all three pillars. Institutional innovations, such as putting purpose into corporate law, requiring integrated reporting and stimulating engagement by the financial sector can encourage companies to adopt sustainable business practices.

Responsible education

A transition to the impact economy model requires a change of mindset and new skills to understand the social and environmental pillars. Responsible education can help to build people’s capacities to overcoming the lack of motivation for sustainable action. Responsible education in economics, business and finance aims to develop the capabilities of students to be future generators of sustainable value for society and business. Responsible education is also valuable for professionals who are already working in government and business.

Since the Industrial Revolution, economic and financial capital have accumulated by building on social and natural capital, bringing us material prosperity, but at the expense of rising social inequality and environmental degradation. It is now time to put economic and financial capital at the service of social and natural capital in order to deliver lasting prosperity for all.

Edmans, A. (2020), Grow the Pie: How Great Companies Deliver Both Purpose and Profit, Cambridge University Press, Cambridge.

Kallis, G., V. Kostakis, S. Lange, B. Muraca, S. Paulson and M. Schmelzer (2018). ‘Research on Degrowth’, Annual Review of Environment and Resources, 43, 291-316.

Lima de Miranda, K. and D. Snower (2020), ‘Recoupling Economic and Social Prosperity’, CEPR Discussion Paper, No. 14421.

Mayer, C. (2018), Prosperity: better business makes the greater good, Oxford University Press, Oxford.

Schoenmaker, D. (2020), ‘The Impact Economy: Balancing Profit and Impact’, Working Paper, Erasmus Platform for Sustainable Value Creation.

Stiglitz Report (2009), ‘Report by the Commission on the Measurement of Economic Performance and Social Progress’, Paris.

More information

If you enjoyed reading this, try another in our series of blog posts about sustainable finance at Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University. It is intended to act as an introduction to the Platform’s work; to promote and poster the professional development of sustainable finance. Please see our web pages to find out more.

Read our new working paper on the Impact Economy here.

Together with the financial sector, the Erasmus Platform for Sustainable Value Creation aims to enhance knowledge about sustainable finance. Max Berkelmans, alumnus of RSM’s MSc Global Business & Sustainability Alumnus (2019) and now a global trainee with Rabobank, shares the most important insights from his thesis research conducted during his internship at Commonland, a not-for-profit organisation that works to enable large-scale and long-term restoration initiatives. Max writes about the role of project developers and fund managers in blending different types of investments (public, private, philanthropic) for landscape restoration projects.


In 2015, Commonland stated that factory owners would frown on the suggestion that it was a sound business decision to sacrifice production equipment for the sake of the product being made. But this is precisely the way our ecosystems are currently managed. Economies are based on consumption patterns and production methods that generate jobs, while simultaneously degrading the ecosystems that are the basis of this wealth creation.

The World Resources Institute (WRI) states that over the past 50 years, almost a quarter of the world's land mass (i.e. 2 billion hectares or the size of China and the USA combined) has been degraded as a result of soil erosion, salinization, drainage of peatland and wetland, and forest degradation. Such continued land degradation and the loss of ecosystem services – the benefits to humans from natural environments and healthy ecosystems – severely endangers human well-being by threatening food and water security. The list of consequences of the loss of ecosystem services goes on and on: biodiversity loss, increased occurrence of extreme weather events, involuntary human migration, and even civil conflict.

Attracting private investments for landscape restoration

Luckily, there is something we can do: restore landscapes and ecosystems. And initiatives to promote landscape restoration are more prevalent than ever. The United Nations even declared 2021-2030 as the UN Decade on Ecosystem Restoration and aims to showcase successful public and private initiatives to halt ecosystem degradation, enhance the exchange of knowledge of what works, and create links between initiatives and stakeholders that are not usually accustomed to working together. In addition to the decade on restoration, other initiatives such as the Bonn Challenge to restore deforested areas, and the UN’s Sustainable Development Goal (SDG) Indicator 15.3 Land Degradation Neutrality also promote landscape restoration.

These promising initiatives primarily involve the public and civic sector and depend heavily on public and philanthropic funding. But what’s often missing in such initiatives is the involvement of the private sector and in particular, long-term large-scale private investments. Unfortunately, there are many barriers that impede private investors from investing in landscape restoration projects (LRPs), such as such as an unattractive risk:return ratio, investors’ unfamiliarity with the sector, and a disconnect in the market LRPs.

Addressing the funding gap faced by the landscape restoration sector could be done using blended finance, a set of financing mechanisms that combine capital with different levels of risk to drum up capital that can be risk-adjusted and can achieve market rates of return from investments that have positive environmental impact. This kind of work is already being done by the Global Impact Investing Network (GIIN) that  convenes impact investors to facilitate knowledge exchange, highlights innovative investment approaches, and is building the evidence base for impact investing.

But although the idea of blending different types of investments to create a more attractive investment environment for LRPs sounds compelling, very few transactions have actually been made. According to Mirova, the fund manager of the Land Degradation Neutrality Fund, the market for blended finance and landscape restoration are at a very early stage of development.

The importance of intermediaries

What all of these initiatives have in common – and what makes them so hard to establish – is the requirement for effective collaboration between a wide range of stakeholders such as investors, co-operatives, NGOs, knowledge institutions, governmental organisations and smallholder farmers.

There are four relevant stakeholder groups: project developers, local actors, actors surrounding the landscape, and investors.

For example, project developers are well-suited to bridging the international community. They have their own strengths in the process, and they have investors with local actors on the ground – which are important for attracting investments – giving them the outreach and legitimacy for a landscape restoration project.

Local actors have an in-depth understanding of the local and cultural circumstances of any project and can provide the local presence that is necessary for developing long-term and trusted relationships with communities.

The collaboration between these actors, and the role of intermediary organisations such as project developers and fund managers, is exactly the focus of the working paper I created as part of my internship with Commonland.

Activities within landscape restoration projects

As I outlined in my working paper, landscape restoration projects include a wide range of activities which often fall under a common landscape vision or plan created by the various stakeholders. These activities are managed and funded by the stakeholder groups. But before any company or business can generate financial and social or environmental returns, there needs to be an enabling environment in place. For example:

  • Building capacity in co-operatives leads to strong institutions and governance processes that reduce the number of perceived risks that investors see. Better governance processes enhance the probability that co-operatives repay the loans and microcredits.
  • Business development activities lead to the development of new business plans, and more buying and processing of products and commodities. Business development activities thereby indirectly lead to revenue-generating activities because the co-operatives and local businesses are those in which private investments will be made.
  • Nature restoration activities reduce the overall risk of operations for farmers and can contribute to the overall productivity of the land. Restoration activities also ensure the continuity of revenue-generating activities in the landscape.
  • Activities that contribute to the engagement of stakeholders are necessary to develop a common vision for restoring the landscape. It’s important that time and money should be invested in ensuring that farmers, communities and organisations that operate in the landscape feel aligned to that vision and make the transformation to regenerative agricultural practices.

Thus for activities to generate revenue in the first place whilst ensuring social and environmental aspects of the landscape are not compromised, land restoration activities, business development activities and activities that create an enabling environment need to be in place.

Blending of investments at fund and project level

The blending of investments takes place at the project level and the fund level.

  • At the project level, project developers can be seen as an intermediary organisation in co-ordinating investments. They play a key role in attracting donor money and investment capital which they co-ordinate and distribute among actors and activities in the landscape. Project developers can fund co-operatives and local businesses with donations, investment capital and through providing technical assistance and business support. Furthermore, project developers play a role in aggregating smallholder farmers through collaborating with co-operatives.
  • At the fund level, the fund manager can be seen as intermediary organisation for co-ordinating investments. They attract donations and investment capital to diversify and reduce risks for private investors, thereby incentivising them to deploy capital in funds intended for landscape restoration. Blended finance funds can provide technical assistance and money to support building capacity as well as monitoring social and environmental returns. This enhances the development of “investment-ready” projects, mitigates risks, and maximises social and environmental returns. Fund managers play a vital role in aligning investors’ requirements and priorities thus alleviating any mismatches between stakeholders and investors.

More information

If you enjoyed reading this, try another in our series of blog posts about sustainable finance from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). It is intended to act as an introduction to the Platform’s work; to promote and foster knowledge on sustainable finance. Please see our webpages to find out more.

Together with the financial sector, the Erasmus Platform for Sustainable Value Creation aims to enhance knowledge of sustainable finance. Its Academic Director and Professor of Banking and Finance Dirk Schoenmaker presents the challenges and potential solutions for governments in creating long-term value during the COVID-19 crisis and gives his recommendations.

With the emphasis on what happens to society and economic growth, there’s little in the headlines about the effect of the pandemic on the environment. But it doesn’t have to be this way.

Of course, there is huge damage to economies and societies all over the world, with deteriorating health, reduced income and job losses. But by contrast, environmental performance is improving because carbon emissions and usage of raw materials declines because of reduced production and transport during the COVID-19 lockdowns. Nevertheless, the pre-crisis levels of environmental degradation are likely to return when the lockdowns are lifted and economic growth resumes.

Governments, in particular those included in the European Commission’s Green Deal, have been working on the energy transition and the creation of a circular economy in the medium term. By attaching green conditions when granting state aid and guarantees during the COVID-19 crisis, governments could push companies to accelerate the adoption of low-carbon and circular technologies after the crisis is over, and thus aim for a green recovery. It’s already known that economically and environmentally viable companies carry a lower credit risk.

The European Commission (2020a) has temporarily lifted rules for the control of state aid to ensure that the disruptions caused by the COVID-19 pandemic do not undermine companies’ economic viability. State aid can take the form of wage subsidies, tax and social contributions relief, financial support, and loans and guarantees via banks. By limiting unnecessary company failures and job losses, the Commission aims, rightly, for a swift economic recovery after the pandemic. Meanwhile, several countries have pledged large state aid packages to steer companies through the crisis.

Green state aid

Both economic and environmental viability are important for companies’ survival in the long run. Sustainable conditions for companies that receive state aid will change their business models. It will also affect market outcomes. To allow the smooth functioning of the internal market, The Erasmus Centre for Sustainable Value Creation (ECSVC) therefore suggests that the Commission designs and monitors sustainable conditions as part of their temporary framework for state aid measures during the pandemic.

These conditions can be based on the Green Deal targets to reduce carbon emissions in 2030 by at least 50 per cent and in 2050 by 100 per cent (ie carbon neutrality), compared with 1990 (European Commission, 2019). In addition, new targets are set for the design of sustainable products and circular production processes to reduce the use of virgin materials in the new Circular Economy Action Plan (European Commission, 2020b). When granting state aid, governments should require companies to implement these reduction targets for carbon emissions and use of materials in their business models after the crisis. In this way, state aid expenditures will not only promote the economic viability of companies, but also their environmental viability. This will accelerate the adoption of low-carbon and circular technologies.

Prompt state aid

Companies are struggling for survival right now and need to receive the state aid quickly. To reduce the upfront administrative burden, governments can choose to apply a simple sustainability test for granting state aid, combined with a tougher test ex post. If a company breaches the agreed conditions, the state aid would have to be partly or fully repaid, depending on the severity of the breach. We also propose that these conditions target key sectors that are carbon- and material-intensive to keep bureaucracy to a minimum.

These are the sectors that have relatively high carbon and material footprints (Schoenmaker and Schramade, 2019):

  • Transportation: road, air and water transport are predominantly powered by fossil fuels;
  • Manufacturing: many manufacturers still employ energy- and material-intensive technologies;
  • Construction: many buildings under construction are being built using non-recyclable and energy-intensive materials such as cement;
  • Energy: the shift from fossil fuels to renewable energy is still very gradual.

Example 1: GM and EVs
Support for the American car industry during the global financial crisis of 2007 was conditional on sustainable progress. In 2009, President Obama granted large sums of state aid to General Motors on the condition that the company accelerated the development of its electric vehicles (EVs). General Motors now has EVs – cars and commercial vehicles – in its range.

Example 2: Carbon-neutral trips
The airline and travel industries are severely affected; as a condition of state aid they could be requested to speed up investment in carbon-efficient aircraft after the crisis, while airline manufacturers could be requested to speed up the development of carbon-efficient and carbon-neutral aircraft. Travel companies, such as TUI, which received €1.8 billion in state aid from Germany, could be asked to reduce their carbon footprints by 50 per cent by 2030. Travel companies could achieve such a reduction by offering clients more carbon-efficient air travel and by encouraging more travel by train.

Example 3: Loans conditional on sustainability
Banks can set similar conditions for sustainability when giving loans to companies in these sectors (with or without public guarantee) during the crisis. The underlying arguments are the same: economically and environmentally viable companies carry a lower credit risk. Leading banks already have experience of applying sustainability criteria to lending (Schoenmaker and Schramade, 2019).

Change the system

Some high-carbon companies and sectors might find it difficult to adapt to the new low-carbon and circular environment. The situation of these companies and the sectors using fossil fuels are reminiscent of the European textile and shipping sectors in the 1990s. State aid received by companies in textiles and shipping only delayed their disappearance. To avoid repeating these mistakes, governments should not provide state aid or guarantees to sectors that are economically or environmentally not viable in the medium term.

In these cases, governments must use their resources to retrain workers. While the kneejerk reaction of governments is often to help the business that is in trouble and/or to protect the jobs involved, it is better to focus on helping the people – retraining and finding new employment – and changing the system. The Danish labour market, for example, is known for its high level of flexibility for hiring, in its social welfare system and for its active employment policies. Together, these three components constitute what is known as the ‘Flexicurity Model’ (Jespersen et al, 2008).

There is also a direct role for governments in sectors that rely heavily on public investment and/or planning procedures, including the energy, transport and building sectors. Birol (2020) proposed to speed up the energy transition by putting clean energy jobs at the heart of stimulus packages. Other opportunities would be to expand public transit systems – including a European network of high-speed trains – and stimulating circular construction practices, which also require newly trained workers. Retraining efforts can also be partly directed to these areas.

After the global financial crisis of 2007, several countries speeded up recovery by shortening planning procedures so that large building and infrastructure projects could advance. Accordingly, governments can now speed up the planning and execution of renewable energy projects such as power generation and distribution, as well as public transport projects that could replace road and air travel, and construction projects with a circular business model.

Four recommendations

Governments are rightly compiling state aid packages to promote a swift recovery after the COVID-19 pandemic is ended. Our four recommendations to foster a green recovery are:

  1. Apply sustainable conditions to state aid for companies in sectors with high carbon and/or material footprints;
  2. Apply similar conditions to new and extended bank loans (with or without public guarantees) to these sectors;
  3. Refuse state aid for companies and sectors that are not able or willing to adopt low-carbon and circular technologies, nor to retrain their workers for new employment;
  4. Speed up planning procedures for renewable energy, public transit and circular building projects and infrastructures.


Birol, F. (2020), ‘How to make the economic recovery from coronavirus an environmentally sustainable one’, Prospect, 24 March.

European Commission (2019), ‘The European Green Deal’, Communication from the Commission to the European Parliament and the European Council, COM(2019) 640 final, Brussels.

European Commission (2020a), ‘Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak’, Communication from the Commission, COM(2020) 1863 final, Brussels.

European Commission (2020b), ‘A new Circular Economy Action Plan For a cleaner and more competitive Europe’, Communication from the Commission, COM(2020) 98 final, Brussels.

Jespersen, S., J. Munch, and L. Skipper (2008), ‘Costs and benefits of Danish active labour market programmes’, Labour Economics, 15(5): 859-884.

Obama, B. (2009), ‘Remarks by the President on the American Automotive Industry’, Transcript of Press Conference, 30 March, Washington DC

Schoenmaker, D. and W. Schramade (2019), Principles of Sustainable Finance, Oxford University Press, Oxford (available as a free download)

Schoenmaker, D. (2020), ‘The Caring Economy: Balancing Profit an Impact’, Working Paper, forthcoming.

More information

This is a blog from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). The Platform aims to enhance knowledge and debate on sustainability in the financial sector. Curious to learn more? Please see our webpage to find out more.

Together with the financial sector, the Erasmus Platform for Sustainable Value Creation  at Rotterdam School of Management, Erasmus University (RSM) aims to enhance knowledge of sustainable finance. Willem Schramade is member of the platform and founder of the Sustainable Finance Factory. In this blog he writes about showing societal value creation by corporations. That is, what do they contribute to society beyond profits? And how can they report on that? ABN AMRO has produced an impact report that shows the way forward – and Schramade did a case study on this process.

Many companies talk about their social and environmental contributions, but very few make them visible. This is typically attributed to lack of methods and data. But ABN AMRO has taken the bold step to produce insightful impact statements, including an integrated profit and loss (IP&L), which show that it can be done. This case study analyses how ABN AMRO got to produce its Impact Report, what is in there, and what its impact could be. The main obstacles seem to be mindsets rather than data and methods.

Why is this important?

Companies are under increasing pressure to show their societal contributions, and many have become vocal on the topic. However, the vast majority of reporting has remained in the realm of anecdotes and data that happens to be available. Very few have set targets on their societal contribution. Even fewer have tried to quantify their societal contribution. That is a pity, as since we need societal value to become visible and managed for. The below table illustrates the role of impact statements in making societal value visible.

The problem is that the bottom line of the table is typically much less developed than its financial equivalent. To get environmental and social value properly integrated in financial markets, impact statements can be an important driver.

Our case study investigates how ABN AMRO’s impact statements have come about; what’s in them; what can be improved; and what we can learn from them.

We find that building impact statements appears to be a very powerful and insightful exercise for companies to do. The technical challenges seem to be less daunting than typically perceived, but attributing impact remains a major challenge. The main obstacles however, seem to be mindsets rather than data and methods.

How did they do it? How hard was it to do it?

It took ABN AMRO just six months to construct impact statements, but that was after years of co-operation and pilots with Impact Institute. And it had to overcome several challenges. First of all, it faced the conceptual challenge of making societal value visible. Second, there was the data challenge of collecting hundreds of non-financial indicators and condense them into a small set of measurable goals. Third, it brought about process complexity for the organisation, as it not only hasd to collect those data, but it needs to get ready to manage for it in a way that fits its purpose and goals. Fourth, it meant a people challenge.

The project team needed  a lot of data from all parts of the bank, and for those people to actually provide the data, the team had to explain why it was needed. It also required trust. Therefore, they promised the business lines that nothing would go out without their permission, and they followed all the proper governance mechanisms within ABN AMRO that also apply to regular financial reporting disclosures. "It's important to realise that impact involves a different kind of data uncertainty than finance and accounting people are used to."

What do the ABN AMRO impact statements show?

ABN AMRO’s impact report starts with an introduction by CEO Kees van Dijkhuizen, emphasizing the goal of creating long- term value for stakeholders, and what kind of information is needed for that. The rest logically follows from that, with the impact statements as the core. The organizsation’s objectives are reflected in the five types of impact statements, which should deliver the information required to manage long-term value for stakeholders (see the table below).

The IP&L is the main statement in ABN AMRO's Impact Report. Many choices had to be made on how to present it. For example, ABN AMRO decided to give ranges instead of numbers. The reason is that the exact impact results may be subject to change as methods and data improve, and then ranges are more robust. The project team considered many ways to visualize the impact and eventually chose bubbles denoting positive (green) or negative (grey) in millions of euros.

The IP&L statement contains 43 items, with bubbles per line within each of the six capitals (financial, manufactured, human, intellectual, social, and natural), and columns per stakeholder group. For these 43 separate impact categories, the bank measures hundreds of indicators. Of course, steering cannot be done on all those indicators. 

In terms of long-term value creation for its stakeholders, ABN AMRO concludes that most value was created for clients, namely in the range of €5-10 billion, which may or may not be more than for the combined value creation for the other stakeholders (€2.5-11 billion): employees (€0.5-1 billion), investors and society at large (both €1-5 billion).

ABN AMRO reports on ‘do no harm’, its external costs, on page 16, split by the types of capital. Natural capital turns out to be the biggest negative, at -€0.5 to -1bn, while intellectual capital and social capital are both in the range of -€0.1 to -0.5bn. This implies that the total external costs are in the range of €0.75 to 2bn. These are significant numbers for a bank with a net profit of €2.3 billion in that same year, i.e. the negative externalities amount to 30-90 per cent of profits.

Questions raised

The report is ground-breaking, which raises the obvious question what its own impact is and will be. What has been the impact on decision -making? What has it brought? What has the feedback been like? What are the likely drivers of uptake elsewhere? How do you know if the impact performance is good enough? That is,

how do the results of the IP&L compare to the bank’s potential and to peers? Is this a weak, okay or strong performance? That is not a conclusion for the bank to be drawn, but in the end the reader would want to understand the context to make that verdict.

What’s next?

As CEO Kees van Dijkhuizen said in his introduction, this is only the beginning.  Ideally, future impact reports will see the inclusion of:

  • historical and forward-looking statements that include targets and scenarios on how important social and environmental issues will evolve
  • tansparency and granularity on assumptions
  • more examples of how value was created or destroyed
  • clearer links between the various statements
  • an integrated balance sheet that allows the calculation of integrated returns.

All of this would help readers of impact reports to understand how the company creates value, and how that compares both to its potential and to others.

For the reporting organistions, such analysis would be welcome to be fed into strategy; investment decisions; board discussions; management remuneration; employee incentives and evaluation; and ultimately decision-making at all levels of the organisation. In doing so, the organisation truly embeds the objective of integrated value creation, and is more likely to be successful.

On an industry and societal level, positive changes would be:

  • other banks and companies to start issuing similar reports
  • auditors to become skilled at auditing such reports
  • inclusion of sustainability issues into reporting standards like IFRS (International Financial Reporting Standards)
  • business schools teach about the methods and thinking behind impact reports
  • data providers to systematically collect such data like they do with financial data
  • security analysts and investors to use such reports for assessing long-term value creation – and make educated guesses where reports are underwhelming
  • investment for long-term value creation across organiszations and markets.

In this way, integrated value creation could become the standard corporate objective, leading to better societal outcomes.

Read the full impact statement report.

More information

If you enjoyed reading this, try another in our series of blog posts about sustainable finance from the the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM).

Over the past few years, several investors have developed strategies based on the SDGsAnnebeth Roor recently published a working paper for the Erasmus Platform for Sustainable Value Creation on that subject. Here, she blogs about examining the SDG investment strategies of an equity fund and a credits fund.

The research shows that where Environmental, Social and Governance (ESG) ratings and information predominantly focus on the business conduct of companies, the SDGs focus attention on the current challenges in the world, and possible solutions. When focused on the actual impact of a company, the SDGs can support the assessment of a company’s contribution to challenges and its preparedness for the world of tomorrow.

SDG investing in practice

Investing on the basis of the SDGs frequently produces one of two kinds of reaction: one person might fear ‘SDG-washing’, but another emphasises the strength of a common language for the societal and environmental challenges that the world faces. Several asset managers have already developed investment products that integrate the SDGs into investment decisions. In a working paper SDG Investing in practice recently published by the Erasmus Platform for Sustainable Value Creation, two SDG investment strategies were researched.

Annebeth Roor, who graduated from RSM’s MSc in Global Business & Sustainability in 2019, examines the SDG investment strategies of an equity fund and a credits fund. Her research shows that given the limited attention that investors have in making decisions, the SDGs can influence the focus and language in the fundamental analysis of a firm. The set-up of a SDG investment strategy in structures and processes plays a large role in this. In both methods the asset managers focus on their own proprietary assessment of the SDG impact – and not of that of the companies themselves. Where ESG ratings and information predominantly focus on the business conduct of companies, the SDGs focus attention on current challenges in the world and potential solutions. This other perspective helps investors to focus attention on the societal and environmental impact of the company. This leads to an increased effort to indicate and measure the impact of a company, either via a proprietary assessment or via engagement with the firm.

Saudi Aramco’s contribution to the SDGs

Take a look at the long-expected Initial Public Offering (IPO) of Saudi Aramco, a Saudi Arabian national petroleum and natural gas company. At first it was expected to become the world’s largest listed company, but soon several environmental, social and governance concerns began to have a large effect on the firm’s valuation. Several Dutch institutional investors declared they would not invest in Aramco, but for investors with a passive strategy, the decision whether or not to buy from the IPO of Saudi Aramco is still a dilemma. Saudi Aramco itself states on its website:

‘Quite simply, sustainability makes good business sense. From continuously improving operational efficiency and the environmental performance of our facilities, to pursuing low carbon energy solutions, and strategically investing for growth, we view sustainable practices as the best way to ensure our business remains viable for the long-term.’

When statements like these are accompanied by a thoroughly worked-out policy for Corporate Social Responsibility, they can result in a good ESG score, adding extra eligibility to the company’s prospects of attracting investors. And simply for disclosing this information, Saudi Aramco might even also claim that it is making a contribution to SDG 8 Decent Work and Economic Growth, and SDG 9 Industrial Innovation and Infrastructure, based on energy efficiency and innovative production methods.

But does this actually tell us anything about the value creating potential of Saudi Aramco and its ability to contribute to certain challenges? The organised perspective of the SDGs helps investors to find an answer to these questions. When potential investors use the framework of the SDGs to focus on the real impact of a company, they can indeed support the assessment of a company’s contribution to challenges and the preparedness for the world of tomorrow.

More information

This is a blog from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). The Platform aims to enhance knowledge and debate on sustainability in the financial sector. Curious to learn more? Please see our webpage to find out more.

Together with the financial sector, the Erasmus Platform for Sustainable Value Creation aims to enhance knowledge of sustainable finance. In this blog Joep Houf, research assistant and recently graduated master student of finance and investment, writes about the challenges and possible solutions for investors to create – in consensus with companies – long-term value.

Investing for the long term… But how?

Traditional finance models adhere to a standard that exclusively captures risk-adjusted returns. But this underlying premise is creating trouble for those who want to shift from pure financial investing to a form of investing that takes into consideration financial, social and environmental value. It’s a ‘neo-classical paradigm’ reinforced by additional challenges that traps investors into obsolete practices.

However, pursuing a long-term stratagem means asset managers can outperform orthodox colleagues economically, socially, and environmentally. But how does one pursue a long-term value creating strategy? In order to answer this question, we first need to identify the key challenges.

Key challenges to long-term value creation

In a recent study by Tupitcyna (2018) Dutch institutional investors were surveyed to identify the key issues that they face. These intertwined challenges have both internal as well as external sources.

Benchmarking was one dilemma flagged up by investors. This notion concerns the assessment of a manager’s performance by comparing it to a passive benchmark (for instance a market-tracking fund). Underperforming against this benchmark may have unwanted consequences for any responsible asset manager, so benchmarking incentivises managers to follow a passive strategy, while we know that activism is needed for creating long-term value.

A second key challenge is short-termism, which happens a lot. Asset owners or other parties involved may demand a certain level of daily, weekly, or monthly returns, making it nearly impossible to invest with a long-term vision.

Perhaps this short-termism is underpinned by the mismatch of alignment in the investment chain. As we just mentioned, investment managers in institutional investment firms often have to justify their choices to the ultimate asset owner. Different opinions about environmental or social returns may obstruct investing in such dimensions.

A fourth challenge is the lack of integrated thinking. This is an internal problem in institutional investor firms. Different departments focus on different themes. If there is little integration between, for instance, experts in environmental, social and governance matters (ESG) and portfolio managers, then ESG issues may not be considered in investment decisions.

Finally, one of most difficult problems for all parties dealing with sustainability is the lack of standardisation. It is hard to define and quantify sustainability. Moreover, developing measurement programmes for some sustainability-related concerns is very expensive and time-consuming. There are also problems with outsourcing the rating of sustainability performance to external agencies; consider conflict of interests or lack of transparency, for example. This makes it hard for institutional investors to determine which investment is considered to be sustainable and which is not.

Shareholders can commit

Prof. Dirk Schoenmaker and I propose encouraging committed shareholding. This means shareholders becoming committed to the company and involved in setting its strategy.

Negotiations and agreements between important shareholders and the company management offer opportunities to set a long-term strategy and oversee its implementation in practice. Ultimately, this is beneficial to both parties.

Here’s how it can work: company management teams often want to invest in long-term and/or sustainable projects, but feel pressured by investors who demand lively and positive financial returns. This may determanagement from engaging in such projects. But if management have the support of an important shareholder for projects that deliver a net positive value for more than merely the financial dimension, this creates room for projects that enhance long-term value. Managers will feel more confident about the long horizon and worry less about, for example, shareholder pressure or takeovers.

From the investor’s perspective, being committed is also beneficial. Not only is the investor able to influence company practices that align with their own preferences, but they also have more insight into and information about in the business, and their expectations are more realistic.

So a long-term strategy outperforms short-term orientated investments. Asset owners’ demands to get involved in the core of the company and influence the pursuit of a sustainable strategy, as a result of concerns about ESG, may also be satisfied by this approach (Bloomberg Intelligence, 2017).

While we’ve argued here that committed shareholding can help develop the creation of long-term value, we have not touched upon how to stimulate committed shareholding.

Encouraging commitment

In a soon-to-be-published report, Prof. Dirk Schoenmaker and I propose three models that might support shareholder commitment and, thus, long-term value creation. These are known as the nomination committee model, the co-ordinated engagement model, and the privileged shareholder model.

The nomination committee model refers to a corporate governance practice by which the largest and most important company shareholders are asked to join the nomination committee, which is responsible for recruiting and selecting new board members to be proposed at the annual general meeting. The committee meets company management to set a long-term strategy, and selects candidates accordingly. This method demands co-operation between shareholders and management over the long-term vision.

The second model, co-ordinated engagement, promotes shareholder activism and shareholder collaboration via an external third party, for example the PRI collaboration platform. A group of investors, usually led by a local and important shareholder, engages the company in debate on specific ESG issues. During these discussions, investors and management agree about sustainability performance. Ultimately, this leads to long-term alignment of preferences.

Our third and final proposal is the privileged shareholder model that rewards shareholders for their engagement and time. For example, long-term shareholders are rewarded with extra voting rights. This is attractive for investors and management, because their visions are aligned. It also creates room for discussions between management and investors about long-term objectives before investors receive any additional rights.

Starting a discussion…

Each of these models come with pros and cons for feasibility and ease of implementation. However, from our discussions with Dutch institutional investors, it became apparent that there are barriers to long-term investing. This fact provides a scope for development which Dirk and I are determined to explore. So instead of providing a fixed solution, we will use this study to open up discussion about long-term value creation.

More information

This is a blog from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). The Platform aims to enhance knowledge and debate on sustainability in the financial sector. Curious to learn more? Please see our webpage to find out more.

Together with the financial sector, the Erasmus Platform for Sustainable Value Creation aims to enhance knowledge of sustainable finance. In this blog, Dr Gianfranco Gianfrate, academic member of the platform, along Mattia Peri writes about green bonds as a form of sustainable investment. Why does the market seem to favour a premium in the pricing of green bonds – making them more convenient for issuers?


‘Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development’ was one of the agreements of countries taking part in the United Nations’ 21st Conference of Parties (COP21) in 2015. The decision was intended to ‘hold the increase in the global average temperature to well below 2°C above pre-industrial levels’ – an ambitious goal.

Shift from rhetoric to action

But how can the transition to a global low-carbon economy be achieved? The transition becomes more and more crucial – especially because it needs a massive amount of financing to shift from rhetoric to action. Banks have restricted their lending capabilities, and public budgets are under strain. So it’s probably time for private sector sources of capital to be engaged. Green bonds have recently emerged as one of the best ways to help mobilise financial resources towards clean and sustainable investments.

What is a green bond?

Green bonds are a relatively new type of bond defined by the International Capital Markets Association as ‘any type of bond instrument where the proceeds will be exclusively applied to finance or re-finance, in part or in full, new or/and existing eligible Green Projects’.

In other words, green bonds are conventional bonds with just one distinguishing feature: proceeds are used to finance environment-friendly projects, usually this is climate change mitigation and adaptation.

The market for green bonds aims to enable and develop the important role that debt capital markets play in funding projects that contribute to environmental sustainability. The recent evolution of this market confirms the tremendous potential of this financial instrument. Indeed, since the European Investment Bank issued the first green bond in 2007, the market has kept growing and becoming more sophisticated. It crossed the US$ 160 billion threshold in 2018.

Why issue a green bond?

Green bonds have some extra costs compared to conventional bonds because issuers must track, monitor and report on the use of their proceeds. However, issuers (especially frequent issuers) benefit by being able to highlight their green strategy, present a positive marketing story, and diversify their investor base.

But the crucial question is can these issuers also benefit from lower cost of financing by opting for green bonds instead of conventional bonds? In other words, is there a negative premium (lower yield) associated with this class of bond? Can green bonds play a major role in greening the economy without financial penalty for the issuers?

Despite the importance of this question for the future of the market – and despite the growing relevance of this class of assets – there is still only limited evidence of such bonds actually being convenient compared to other bonds with similar characteristics but without the sustainability element.

Green bonds are convenient

Results from our analysis indicate that the ‘green’ label does have a significant impact on bonds pricing in the primary market. Indeed, by analysing data from the most comprehensive sample (‘All’), the estimates of the premium (which look robust) are between ‑14.8 basis points and ‑19.4 basis points. This means that, on average, an issuer can achieve a lower cost of financing by issuing a green bond instead of a conventional one. This is true even if, in theory, prices should be flat because the credit profile of green bonds is the same as other conventional bonds from the same issuer.

What’s responsible for this kind of performance? Mainly, it’s the huge appetite of investors for this class of bonds. Investors increasingly want to integrate environmental, social and governance (ESG) factors into their investment processes. Consequently, most issues of green bonds have been oversubscribed by a large margin.

Notably, although we confirmed the existence of a negative premium in both subsamples, it appears to be more marked for bonds issued by corporations. Their average green bond premium is ‑20.95 basis points. On the other hand, the green bond premium for non-corporate issuers ranges from ‑17.4 basis points to ‑13.5 basis points, with an average premium of ‑15.26 basis points.

What we know

The green bonds market still has a lot of potential for growth and is already playing a tremendous role in channeling finance flows towards green and sustainable investments.

Our research has shown that green bonds benefit their issuers, and they can lower the cost of financing. In other words, the market seems to incorporate a discount in the pricing of green bonds and this makes them relatively more convenient for issuers.

More information

If you enjoyed reading this, try another in our series of blog posts about sustainable finance from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). It is intended to act as an introduction to the Platform’s work; to promote and foster knowledge on sustainable finance. Please see our webpages to find out more.

Together with the financial sector, the Erasmus Platform for Sustainable Value Creation aims to enhance knowledge on sustainable finance. Tim Kievid, research assistant and master student of finance and investment. In this blog he writes about the reliability of published CO2 emission data.

Recently, over 70 Dutch economists signed a letter in which they emphasised the importance of an economy-wide, uniform tax on CO2 emissions – which have caused the most warming of all greenhouse gases. CO2 emissions are high on investors’ watch lists too. Investors want to identify firms that are likely to thrive after a shift to a low-carbon economy. For that they need good data. But is good data available?  

Is sustainable investing about to stall?

I read in The Financial Times in January that “almost seven in ten asset managers say the lack of high-quality information is the biggest challenge in adopting ESG principles” and that “without progress, the momentum in sustainable investing may stall”.

Using ESG principles

In sustainable investing, investors look beyond firms’ financial results to their environmental, social and governance (ESG) performance. This practice has gained popularity over the past decade. Sustainable investing creates value for society as a whole by taking into account matters such as firms’ involvement with child labour, polluting activities and greenhouse gas (GHG) emissions.

A difficult practice

On an intuitive level, everyone understands that investors would rather not invest in companies that score badly on matters like child labour or CO2 emissions. Unfortunately, the practice of sustainable investing is more obstinate. Investors are often unable to visit their potential investees or assess their performance with regard to sustainability on site or in person. Investors can only look at ESG scores provided by financial analysts such as Thomson Reuters or Bloomberg. CO2 emissions are high on the ESG watch-list. Understandably, investors want to identify firms that are likely to thrive in a shift to a low-carbon economy and they require data to do so.  But there is a lack of reliable data.

Quality of emission data

Although I was familiar with this problem, it was only when Prof. Dirk Schoenmaker asked me to map the carbon emissions of the largest firms in the eurozone, that I started to relate to the critiques.

The Greenhouse Gas Protocol sets the standards for measuring and reporting emissions that are widely used in business. Guidelines from the Protocol serve the quality and reliability of emission data – but that data can be, broadly speaking, jeopardized in two dimensions.

The first problem: double counting

First, there is the issue of ‘double counting’. Carbon emissions fall into three categories, also referred to as scopes. Scope 1 emissions come directly from the organisation. For example, an airline’s Scope 1 includes carbon emitted by the airplanes it uses. Scope 2 emissions are indirect emissions that come from generating purchased energy consumed by the firm. Scope 3 emissions are all the other indirect emissions generated upstream and downstream in the value chain. For example, an aircraft manufacturer’s Scope 3 emissions include carbon emitted by all the airplanes the firm has manufactured and sold in the past.

Consider that aircraft carbon emissions fall in Scope 1 for the airliner and in Scope 3 for the aircraft manufacturer. Double counting occurs when both scopes count the emissions – even if they are reduced – causing the reported total to no longer match the actual emissions.

The second problem: emission factors

Second, firms use ‘emission factors’ that equate carbon emissions to a particular business activity. Firms can calculate their carbon emissions using their activities as input. There are sources of uncertainty in this method, and I won’t go into detail here, but these uncertainties jeopardise the data.

Is there a third dimension of error?

When I started my work for Dirk, the flaws I described above were known to me. I did not know, however, that I was about to discover a whole new dimension of data errors. I checked scope one and two emission data in detail and I found that over 15% of the data entries in my sample did not correspond to the data in company reports. Some data entries were off by a factor thousand; yet others differed completely from the company disclosures; some data missed where I was able to find it in the company reports.

Data barriers for sustainable investing

When thinking of ESG data quality issues, carbon emission would be the last ESG metric to come to my mind. I perceived carbon emission data as relatively easy to judge and compare, given that it is quantifiable and measurements involve little subjectivity. Think about all those other components that sustainable investing encompasses, like employer well-being, good education and health. Those matters are more subjective and probably even harder to measure.

Realising my misconceptions, I started to better understand the data barriers for sustainable investing. Although the adoption of sustainable investing has started, crossing the chasm requires many more improvements of data quality across the ESG spectrum. Improving reporting quality may be a good place to start.

More information

If you enjoyed reading this, try another in our series of blog posts about sustainable finance from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). It is intended to act as an introduction to the Platform’s work; to promote and foster knowledge on sustainable finance. Please see our webpages to find out more.

Together with the financial sector, the Erasmus Platform for Sustainable Value Creation aims to enhance knowledge on sustainable finance. Dirk Schoenmaker is professor of banking and finance at RSM. He recently published ‘Principles of Sustainable Finance.

In a working paper he wrote recently for the think tank Bruegel, he writes about central banks’ greening policies. The European Central Bank’s (ECB) market-neutral approach to monetary policy undermines the general aim of the EU: to achieve a low-carbon economy. An alternative angle would be to foster low-carbon production, accelerating the EU’s transition to a low-carbon economy, and could be implemented without interfering unnecessarily with the main aim of stabilising prices.

Carbon-intensive companies – such as fossil-fuel companies, utilities, car manufacturers and airlines – are typically also capital-intensive. Market indices for equities and corporate bonds are therefore unduly weighted with high-carbon assets. Figure 1 summarises the average carbon intensity – defined as carbon emissions divided by sales – of various industrial sectors in Europe.

As expected, the oil, gas and coal sector has the highest carbon intensity followed by the materials sector (which includes metal producers and construction), utilities, chemicals, transportation (including airlines), and automotive (including carmakers). The lopsided distribution of carbon intensity shows that just a few sectors are responsible for most of the carbon emissions.

Note: Figure 1 depicts the average carbon intensity of sectors, measured as average of emissions in metric tonnes of CO2 divided by sales in millions of euros. Scope 1, 2 and 3 emissions are included for the 60 largest corporates in the euro area.

Source: Schoenmaker (2019).

In its monetary policy, the ECB – like any other central bank – follows a market-neutral approach in order to avoid market distortions. This means that it buys a proportion of the corporate bonds available in the market. A market-neutral approach thus leads to the Eurosystem’s private-sector asset and collateral base being relatively carbon-intensive. Investment in high-carbon companies reinforces the long-term lock-in of carbon in production processes and infrastructure. The ECB’s market-neutral approach actually undermines the general policy of the European Union to achieve a low-carbon economy.

Under their mandate for financial stability, central banks have started to examine the impact of climate-related risks on the stability of the financial system. Why don’t they address the carbon intensity of assets and collateral in central banks’ monetary policy operations too?

Legal mandate

Does the legal mandate of central banks allow the ‘greening’ of monetary policy? Their primary responsibility is to maintain price stability, with a secondary responsibility to support economic growth. Interestingly, the European Union applies a broad definition of economic growth. Article 3(3) of the Treaty on European Union says that “The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability … and a high level of protection and improvement of the quality of the environment.” This broad definition of sustainable economic growth could provide a legal basis for greening monetary policy.

The ECB can only pursue its secondary objectives if they are without prejudice to its first objective. Our proposal to tilt the portfolio (see next section) does not lead to unnecessary interfering in price stability. Everyone is a stakeholder in the environment and the climate, so the ECB could contribute to the climate agenda as well, but without getting political.

So there is a need for political space for the ECB to avoid central bankers making policy decisions. As climate policy is a real concern and consistently a top priority of European policy, the ECB can contribute to this secondary objective in its asset and collateral framework of monetary policy operations. The European Commission and Council have repeatedly stated their aim to combat climate change by reducing carbon emissions. European Parliament members have also asked questions to the ECB president about the ECB’s lack of carbon policies (see, for example, Draghi, 2018).

Greening monetary policy operations

In a new paper, we propose tilting the approach to steer the Eurosystem’s assets and collateral towards low-carbon companies. The Eurosystem manages about €2.6 trillion of assets as part of its Asset Purchase Programme, which includes corporate and bank bonds in addition to government bonds.

To explain: while the carbon intensity of corporate bonds can be assessed directly, it is more difficult for bank bonds. The look-through approach can be applied, whereby the underlying beneficiary is assessed instead of the intermediating bank. For bank bonds, the carbon intensity of a bank’s total loan portfolio should be evaluated.

In its monetary policy operations, the Eurosystem provides funds to banks in exchange for collateral, which currently amounts to €1.6 trillion. The value of collateral gets a ‘haircut’ (a reduction applied to the market value of an asset), reflecting the credit risk.

To avoid disruptions to the transmission of its monetary policy to the economy, the Eurosystem should remain active in the entire market. The basic idea of tilting is to buy relatively more low-carbon assets (e.g. 50 per cent over allocation) and less high-carbon assets (e.g. 50 per cent under allocation). Accordingly, the Eurosystem can apply a bigger haircut to high-carbon assets. Calculations show that such a tilting approach could reduce carbon emissions in the Eurosystem’s corporate and bank bond portfolio by 44 per cent.

Moreover, applying a bigger haircut to high-carbon assets makes them less attractive, reducing their liquidity. Early estimates indicate that such a higher haircut could result in a higher cost of capital for high-carbon companies relative to low-carbon companies of four basis points.

Concluding reflections

A low-carbon allocation policy would reduce the financing cost of low-carbon companies, fostering low-carbon production. The higher cost of capitial could induce high-carbon companies to reform their production process using low-carbon technologies to save on financing costs.

A low-carbon allocation policy in the Eurosystem’s asset and collateral framework would thus contribute to the EU’s general policy of accelerating the transition to a low-carbon economy. To avoid political interference, it is important that the Eurosystem remains fully independent in the choice and design of its allocation policies.

Moreover, this allocation policy must be designed in such a way that it does not affect the effective implementation of monetary policy. Price stability is, and should remain, the top priority of the Eurosystem.


This blog was first published at Bruegel, a European think tank that specialises in economics.

Carney, M. (2015), ‘Breaking the tragedy of the horizon: climate change and financial stability’, Speech at Lloyd’s of London, 29 September.

Draghi, M. (2018), ‘Letter to the European Parliament’, L/MD/18/207, Frankfurt, 12 June.

Matikainen, S., E. Campiglio and D. Zenghelis (2017), ‘The climate impact of quantitative easing’, Grantham Research Institute on Climate Change and the Environment, Policy Paper.

Schoenmaker, D. (2019), ‘Greening Monetary Policy’, Working Paper Issue 02, Bruegel.

Schoenmaker, D. and W. Schramade (2019), Principles of Sustainable Finance, Oxford University Press, Oxford.

If you enjoyed reading this, try another in our series of blog posts about sustainable finance from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). It is intended to act as an introduction to the Platform’s work; to promote and foster knowledge on sustainable finance. Please see our webpages to find out more.

Together with the financial sector, the Erasmus Platform for Sustainable Value Creation aims to enhance knowledge of sustainable finance. Dieuwertje Bosma, project manager of the platform and ethicist looks at finance from a philosophical angle.

In this blog she writes about the launch of the book Principles of Sustainable Finance on 4 February 2019. The book elaborates on an apparently simple idea: add environmental and social dimensions into your investment decisions. But how simple is that in reality?


It’s 4 February  2019. I am at Circl, a circular building in Amsterdam that embraces circularity. With strict policies for waste, resource management and energy use, Circl is designed to run its operations as sociably and as sustainably, and with as little impact, as possible. Even the name of the building represents this: superfluous vowels did not make the final edit when it came to deciding what would be written on the frontage.

Simple solutions for complex problems

I see denim-coloured fabric behind the ceiling tiles in the building. An employee tells me that these are recycled pairs of jeans, used to insulate the building. When I want to order a drink, I see an employee with a T-shirt that says: ‘Do you have a question? Tap me on the shoulder please’ on the back. I tap the employee on the shoulder and learn that he has a hearing impairment. I hear one of his colleagues explaining to a customer that the elevator is not owned by Circl. Instead Circl pays per use, and the elevator actually belongs to its manufacturer, who now has an incentive to recycle it once it has reached the end of its useful life. I wonder: does it sometimes only take a different perspective to solve the wicked sustainable challenges we face?

A perfect fit for a book launch

This location appears to be the perfect fit for tonight’s occasion: the launch of the book Principles of Sustainable Finance, written by Willem Schramade and RSM Professor Dirk Schoenmaker. It’s a book that gives a complete overview of everything there is to know about sustainable finance. And it is the first of its kind in a European context.

Sustainable finance?

The book answers the question of how the financial sector can contribute to a sustainable future. The answer is simple.

Stop taking only financial metrics (F) into account.

Start implementing environmental costs (E) and social costs (S) and values in your metrics too.

An investor’s point of view

Why? It’s easy. The E and S are barely taken into account right now, but that does not mean that they do not exist.

In fact it’s on the contrary. The risks that come with climate change, further depletion of the Earth’s resources and depriving its inhabitants are growing every day. It is only sensible to look forward and assess investments on their  ‘state of preparedness’ for the transition to a sustainable future.     

In simple economics terms, here’s the idea in a simple formula:

Old formula: Value = F

New formula: Integrated value = F + E + S

Simple concept, but complex in practice

Much like the Circl building, the concept of sustainable finance has an intuitive appeal. Why then is it so hard to actually implement it? Once you dive deeper into everyday practice, the level of complexity rises considerably.

Even within a relatively small environment like the Circl building, there are dilemmas. How can it deal with the CO2 emissions caused by people travelling there by car for example? Likewise in the financial sector, there are also still a lot of obstacles to overcome. How can you make environmental and social issues measurable? Can you put a price tag on employer wellbeing? And what about the profitability of sustainable investments?  


These were exactly the topics discussed during the book’s launch. The hurdles are not yet overcome, but it is important to shift our beliefs. Students studying finance and investments today will be the ones that shape the future of the financial sector. That is why it is so important to educate them properly about sustainable finance.

We’re making a start. There are free online teaching materials that have been developed and made available to accompany Principles of Sustainable Finance.

A great starting point

As Prof. Dirk Schoenmaker said during the presentation: “…the [financial] markets were good at achieving goals, not necessarily at setting these goals.” In other words: we need a new understanding of what we hold to be valuable. The linear economy is at the end of its lifecycle, and it is time to get it recycled. This book is a great starting point for further discussion.

More information

This is a blog from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). The Platform aims to enhance knowledge and debate on sustainability in the financial sector. Curious to learn more? Please see our webpage to find out more.

Enhancing knowledge about sustainable finance is the aim of the Erasmus Platform for Sustainable Value Creation – together with the financial sector. Dieuwertje Bosma, ethicist and project manager of the platform, takes a philosophical look at finance. In this blog she explains the basics of sustainable finance.

Finance has long been a silo, with a focus solely on financial measures. This has changed over the past few years: the financial sector is increasingly involved in sustainability because the idea that businesses exist to exclusively maximise shareholder value needs rethinking. The concept that results from this is sustainable finance; it means simply finance that takes into account long-term Environmental (E), Social (S) and Governance (G) factors. Or finance that also takes into account the UN’s Sustainable Development Goals. But there is more to the story.

Why sustainability?

The answer to this starts with the challenges the world faces. We all face immediate environmental challenges that threaten the planet’s liveability: climate change, land degradation, loss of biodiversity, and so on. At the same time, societies also face obstacles: poverty, hunger, lack of healthcare and more. If we want to meet the needs of current and future generations without depleting the planet, or depriving people and societies, then we need a sustainable transition – our systems urgently need a sociological and technical overhaul that propels them towards more sustainable modes of production and consumption. Luckily, an increasing number of people and companies are realising this.

Why should finance care about sustainability?

Should finance consider anything other than profitability and efficient allocation of resources? The answer depends how you consider efficient allocation of resources. Old beliefs stemming from the linear economy hold that resources are efficiently allocated if costs are minimalised and profits are maximised. According to this thinking, growth is always good. Everything else, such as planetary resources and effects on societies, are considered ‘externalities’. The market alone is efficient in setting prices. We don’t think this is wholly true anymore.

Investors can have a positive influence

Sustainability is all about a new interpretation of what it means to allocate resources efficiently; it’s allocation of resources with respect for the environment and for society. Finance is the beating heart of our economy, so it can play a leading role in stimulating or even accelerating the transition towards a sustainable future, by investing in sustainable companies and projects. Furthermore, investors can also positively influence the companies in which they invest that are not yet 100 per cent sustainable – but have the potential to transition to a more sustainable state.


Although the concept of sustainable finance has taken root, the most difficult hurdles are still ahead. One of them is short-termism.

Economic activity has a long term effect on the environment and on society – this is true for risks as well as benefits. Investing in carbon-intensive companies might be very profitable in the short term but we also know that carbon-intensive industries have severe negative effects – and associated costs – that affect the long term of the environment. The challenge is to incorporate those long-term costs up front.

And we all know that it’s complicated to adequately incorporate long-term risks and opportunities into today’s actions, even on a personal level.

So who needs the new knowledge?

So we need the financial sector to shift towards a long-term orientation that creates value for the common good as well as for investors; it’s no longer good enough just to maximise shareholder profits. Scientific research has an important role to play here. The better we understand the true risks – and opportunities – of future scenarios, the better financial institutions will be equipped to make decisions that work for sustainability.

This is why the Erasmus Platform for Sustainable Value Creation was created. When we work with the financial industry, we can help accelerate new knowledge about sustainable finance. Are you interested to find out more about what we do? Please visit our website or contact us!

If you enjoyed reading this, try another in our series of blog posts about sustainable finance from the Erasmus Platform for Sustainable Value Creation at Rotterdam School of Management, Erasmus University (RSM). It is intended to act as an introduction to the Platform’s work; to promote and foster knowledge on sustainable finance.


Earlier this year, the U.S. Securities & Exchange Commission voted to require publicly listed companies to make climate-related information public, after significantly scaling back their initial ambition. In this webinar, the first of our new series on sustainable finance policy & regulation, we decode the new regulation and put it into perspectives at a time of rising regulatory scrutiny over businesses' climate risks and greenwashing with some first-class experts:

  • Elizabeth Seeger, Member of the International Sustainability Standards Board (ISSB)
  • Virginia Harper Ho, Professor of Law at City University of Hong Kong
  • Jake Rascoff, Director of Climate Financial Regulation at Ceres, Inc..

The event is moderated by Nathan de Arriba-Sellier, Director of the Erasmus Platform for Sustainable Value Creation.

View the webinar here

Are you curious about recent sustainability reporting regulations? Learn more about the challenges, opportunities and perspectives of the different approaches adopted by the U.S. Securities & Exchange Commission (SEC) and the European Union's Corporate Sustainability Reporting Directive (CSRD) in this webinar on sustainable finance policy & regulation. From materiality to stakeholder engagement, we discuss these regulatory initiatives with our expert speakers:

  • Emily Pierce, Chief Global Policy Officer at Persefoni;
  • George S. Georgiev, Associate Professor of Law at Emory University; and
  • Robin Scheffer, Senior Director Assurance at PwC.

The event is moderated by Saskia Kohlhase, Associate Professor of Accounting at RSM and one of the academic directors of the Erasmus Platform for Sustainable Value Creation.

View the webinar here

Portrait of Dieuwertje Bosma

Dieuwertje Bosma

Project Manager Erasmus Platform for Sustainable Value Creation