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Much of our research is concerned with the “business case for sustainability”, i.e. how and when ecological and social sustainability can be aligned with economic interests. Our research is situated as a response to two challenges:

  • The International Energy Agency (IEA) estimates that over the period from 2014 to 2035 cumulative investments of $53 trillion in energy supply and energy efficiency are required. Thus, investors have to redirect capital flow toward players that positively contribute to a climate-resilient economy.

  • Second, various business sectors are currently consuming greater levels of fossil fuels and generating higher amounts of GHG emissions than ever before in history. Thus, investors face substantial financial risks in terms of stranded assets.

Scholars and investors have published more than 2000 empirical studies and several review studies on the relationship between environmental, social and governance (ESG) criteria and corporate financial performance (CFP). In one of our most cited papers ever, we extracted all provided primary and secondary data of the previous academic review studies. The results show that the business case for ESG investing is empirically very well-founded. Roughly 90% of studies find a nonnegative ESG–CFP relation/ratio. More importantly, the large majority of studies report positive findings. Furthermore, we highlight that the positive ESG impact on CFP appears stable over time. Based on these research outcomes, we have come to an important conclusion for investors and financial markets as a whole: based on extant/existing literature, the business case for being a good firm is undeniable.

In order to further foster sustainable finance, we consider so-called “impact investments” as a key lever. The impact on the real world is at the heart of this investment style/strategy. In this context, a G7 report on impact investments based its main definition on one of our research papers. This paper argues that term impact investment is often used interchangeably for any investment that incorporates environmental, social, and governance (ESG) aspects.


In the latter instance, achieving transformational change is not the main purpose of such investments, which therefore carries the risk of impact washing (akin to “green washing”). The paper derives a new typology of sustainable investments. This typology delivers a precise definition of what impact investments are and what they should cover. As one central contribution, we propose distinguishing between impact-aligned investments and impact-generating investments.

In times of increasing voluntary non-financial corporate disclosure, investors are confronted with increasingly more information that differs from ordinary financial valuation determinants that are commonly used in capital markets. Thus, our research is also shaped by questions about investor’s behavioral reactions to ESG information in stock markets. Most financial markets lack transparency when it comes to the climate impact of an investment. This is especially true for investment funds which channel millions of private savings into company stocks and bonds every day.


Hence, building on insights from behavioral change research, we investigate how to promote more climate-friendly investing. We model investor’s underlying cognitive processes when assessing ESG information and study consequences for portfolio choice and pricing on the individual as well as market level.

In order to understand and explain the relationship ESG and CFP in detail, we look at different mechanisms, contingencies and moderating factors.


We attempt to illustrate which elements of corporate strategy are central for a positive ESG-CFP relationship. In order to obtain relevant information, we analyze firm’s sustainability and financial reports. Our research considers a wide range of stakeholder expectations and determines their materiality for businesses. Finally, we investigate how specific financial market behavior may facilitate or hinder the integration of ESG criteria within investment decisions and corporate strategies.

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