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

  • 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.