kj.msc@cbs.dk

By Emilie Juel and Prof. Kristjan Jespersen

With the planet facing unprecedented environmental challenges, social inequality, and governmental issues, financial institutions and regulators are rethinking traditional investment schemes and recognizing the potential of investments driven by sustainability. However, the unique characteristics of the private debt asset class, relative to more tangible asset classes, have caused a slow and turbulent progress in integrating ESG standards in their investment processes. Research on the intercept of ESG integration and private debt funds is very scarce. As a result, researchers have not been able to portray how ESG is being integrated into the investment practices of private debt funds.

Introduction

Private debt funds have gained significant traction as an alternative asset class, offering investors attractive returns with lower volatility compared to equity investments. However, the integration of environmental, social, and governance (ESG) considerations in private debt investments has been an area of growing importance. The thesis research of the master’s student, Emilie Juel, aims to explore the current state of ESG integration in North Western European private debt funds, examining their understanding of sustainability, use of practices, ESG reporting, barriers of integration, effect on investment decisions, and the future outlook.

Understanding sustainability and current sustainable practices to integrate ESG

The first objective of this study is to investigate how North Western European private debt firms define and understand sustainability. A shared understanding of sustainability is crucial for the effective incorporation of ESG considerations. Research suggests that private debt funds utilize recognized ESG labels and frameworks such as the UNPRI, GRI, and SFDR to guide their ESG integration. However, the level of commitment to ESG varies among private debt managers. Some managers show less seriousness about their ESG commitment, potentially due to concerns about greenwashing. The issue with ESG claims and reporting of private credit funds is the privacy of underlying portfolio data. On the other hand, a majority of private debt firms are indicating a growing commitment to making ESG an integral part of the investment process, but the lack of a how-to manual is hindering progress.

The second objective is to shed light on the current practices of North Western European private debt firms in integrating ESG considerations into their investment processes. Private debt managers in this region employ various approaches to ESG integration, with negative screening being the most prominent. Additionally, an increasing number of managers are utilizing internal or external rating frameworks, impact investing, and sustainable linked loans (SLL) to incorporate ESG considerations. However, the lack of comparable high-quality data poses challenges in fully implementing these practices. Collaboration and knowledge sharing among industry peers can play a crucial role in improving ESG practices and reporting schemes in private debt.

Barriers hindering more sustainable debt

The research highlights the difficulties faced by private debt managers in integrating sustainability considerations. Obstacles include the lack of comparable and high-quality data in private companies, limited means of measuring sustainability comprehensively, and the time-consuming nature of assessing ESG factors within the short turnaround time of debt investments. Inadequate internal expertise and a scarcity of external consultants with sufficient knowledge of private debt also pose challenges. Also, the significant use of unverified internal rating schemes with little to no validation or insight highlights the risks of inefficient ratings and greenwashing of debt vehicles. Additionally, the limited control over portfolio companies and restricted access to monitoring ESG create distinct obstacles for private debt firms in enforcing ESG standards and unifying integration practices.

The Future of ESG Integration in Private Debt

The future of sustainability in the private debt market remains uncertain yet promising. Capital allocators are increasingly pressuring private debt managers to prioritize sustainable investments, and regulatory bodies are taking steps to address issues related to disclosures, data quality, and greenwashing. Collaborative initiatives from organizations such as EBF, UNPEFI, UNPRI, and EU UN are working towards providing guidance and promoting sustainable investing. However, questions arise regarding the responsibility of private debt managers for the sustainability impacts of underlying assets, with varying perspectives on the extent of their accountability.

To address the challenges and achieve meaningful ESG integration, a collaborative effort from investors, regulators, and other stakeholders is required. Balancing fiduciary duties and ESG considerations will be crucial for private debt managers. Collaboration, knowledge-sharing, and standardization of ESG data can facilitate progress in this domain. Especially across general and limited partners as well as asset class types. By fostering broad collaboration, enhancing transparency for investors, and deepening ESG integration, the private debt sector can align its practices with the growing global sustainability agenda. A tailored regulatory system of rating debt and credit products equally through transparent processes will facilitate more truthful ESG insight. The journey towards a truly sustainable private debt market continues, with opportunities for further exploration and research on the horizon.

Closing thoughts

The integration of ESG considerations in private debt funds in North Western Europe is gaining momentum but still faces challenges. While private debt firms are increasingly recognizing the need for ESG considerations in their decision-making processes, there is still a strong reliance on financial factors that outweigh ESG factors. Quantitative standards and metrics to influence investment decisions based on ESG scores are lacking, and the subjectivity of ESG scores necessitates external validation to avoid potential biases.

Addressing these challenges and achieving comprehensive ESG integration in private debt funds will require collaboration among investors, regulators, and other stakeholders as well as regulated tailored debt rating processes. Transparent and high-quality data on private companies, along with improved means of measuring sustainability, are crucial for effective integration. Additionally, private debt firms need to enhance their internal expertise and seek external consultants with specialized knowledge in private debt and ESG. Nonetheless, the regulatory landscape is evolving, with increasing demands for transparency and accountability in ESG practices. Regulators are taking steps to address issues related to disclosures, data quality, and greenwashing. Striking a balance between fiduciary duties and ESG considerations will be essential for private debt managers, who must navigate evolving regulations while fulfilling their responsibilities to investors. Standardization of ESG data and reporting schemes can play a vital role in facilitating progress in ESG integration. Collaboration and knowledge-sharing among industry peers, including both sponsored and non-sponsored general partners, will contribute to developing best practices and improving ESG integration across the private debt sector.

The future of sustainable private debt holds promise, with growing global sustainability agendas and increasing pressure on capital allocators to prioritize ESG considerations. However, ongoing efforts are necessary to address the challenges, adapt to changing regulations, and foster a collective commitment to responsible investing. The integration of ESG considerations in private debt funds in North Western Europe is gradually progressing. While challenges related to data availability, measurement methodologies, and time constraints persist, there is a growing recognition of the importance of sustainability in private debt investments. By collaborating, sharing knowledge, and standardizing ESG practices, the private debt sector can align its practices with sustainable investing goals and contribute to a more responsible and sustainable financial system. The journey toward a truly sustainable private debt market continues, with opportunities for further exploration and research on the horizon.

This research will be shared with the involved private debt investment managers across North Western Europe to facilitate a greater understanding of ESG integration across the sector, as well as with the UN PRI to assist the research of the field. 

About the authors

Emilie Juel has formerly worked as an investment analyst at Nordic Investment Opportunity, working with alternative investments as part of NIO’sinvestment team.She is currently positioned as an investment banking associate at FIH Partners, where her focus is centered on financial advisory, modelling and valuation. She recently obtained her master’s degree in Applied Economics and Finance from Copenhagen Business School (CBS), where her research explored the connection between financial concepts and sustainability, particularly focusing on the private debt sector. Emilie also holds a minor in ESG & Impact Investments as well as a bachelor’s degree in European Business from CBS.

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics.

By Paul Wieshammer, Brunello Olivero, Simone Tansini and Prof. Kristjan Jespersen

Recent macroeconomic trends have shown a shift requiring companies, organizations, and investors to be increasingly aware of environmental, social, and governance (ESG) issues such as climate change, biodiversity loss, deforestation, and gender equality (Serafeim, 2014). In addition, the consolidation of stakeholder theory also prompts companies to focus on more sustainable practices (Freeman, 2010). This shift does not only impact firms down the supply chain but also financial institutions. As a result, investors are increasingly focusing on non-financial factors when allocating assets.

For example, the world’s green lung, the Amazon rainforest in Brazil, emits more CO2 than it absorbs (Qin et al., 2021). The primary cause of this issue is clearing land to produce commodities like palm oil, soy, and beef. While protecting rainforests has economic benefits for everyone, it comes at a cost to countries that would have to sacrifice their economic development. This global issue requires efforts from both producing and importing countries.

Institutional investors have started to address this commodity-driven forest risk. They distinguish between reputational, operational, market, and regulatory risks. Many are committing to (net-) zero deforestation to mitigate these risks and are seeking transparency in their supply chain. There are several frameworks and tools in place that can help with this (e.g., Forest 500, Trace). However, there is a lack of information about legal requirements in commodity-producing countries, and when laws do exist, they are often not enforced or ineffective.

When examining the legislative landscape of commodity-producing countries, a notable disparity exists in their approaches to addressing deforestation. This variation is due to the diversity of priorities and political systems across different nations, which is their sovereign prerogative. However, from an investor’s standpoint, this can generate ambiguity and hinder their ability to assess legislation and evaluate deforestation risks comprehensively. Findings from secondary research and interviews show that regulation and country-level problems are not the main drivers behind institutional investors addressing forest risk.

However, when evaluating businesses with commodity risk, adhering to regulations can benefit everyone involved. While it is ideal for companies to go beyond legislative requirements, not all firms are likely to do so. Some may be slower to adopt best practices, while others may lead the way. Nevertheless, regulations can motivate all companies to improve. Additionally, a robust system of legislation encourages ethical conduct and compliance throughout the industry. For example, in 2021, the WWF reported that 94% of deforestation and habitat destruction in Brazil could be illegal. How can investors continue to rely on companies’ reporting when associated illegal deforestation is so widespread?

Therefore, it is necessary to closely examine the risks at the country level that are associated with this issue. The researchers have developed a 3-step solution framework that can be used to interact with companies that are at risk of deforestation:

1. Identification of countries with deforestation risk
2. Analysis of present regulations associated with land use and deforestation legislation.
3. Comparison of local regulations with the current situation and with the ideal scenario of zero deforestation

The third step describes identifying local requirements and their fit gap analysis. Finally, investors must consider the current legislation in a specific country, its shortcomings in achieving net-zero deforestation, and the prevalence of illegal deforestation because legislation will only provide information on what is legal.

By implementing this framework and creating a tool that explains the risks involved in investing in businesses of different countries, investors can more effectively consider country-level risks associated with doing business. Furthermore, it can better identify greenwashing and prevent them from engaging in such practices. In summary, it can provide value through more effective engagement with companies and governments to understand their pain points and promote good practices.

About the authors

Paul Wieshammer is currently pursuing a Master of Science in Management at the University of Mannheim. He is currently focusing his studies on the field of industrial decarbonization. He holds a Minor in ESG from the Copenhagen Business School, and has previously worked as an ESG analyst and a consultant in CSRD and EU Taxonomy related projects.

Brunello Olivero, MiM graduate from IE Business school with a specialization in ESG from Copenhagen Business School. Currently working at Kearney Milan as junior consultant

Simone Tansini, graduate in Business Administration and E-business from Copenhagen Business School. Passionate about the interplay between technology, business, and sustainability.

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan Jespersen is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics.

By Mikkel Holbæk Mørch, Tobias Brunsgaard Børglum, and Prof. Kristjan Jespersen

The shipping industry plays a vital role in global trade, but its environmental impact cannot be ignored. The sector contributes a significant share of greenhouse gas emissions, posing a risk to the objectives of the Paris Agreement. While global measures to reduce emissions in the maritime sector have been slow to materialize, shipping companies are recognizing the need for more ambitious sustainability strategies. This blog post summarizes the key findings of a master’s thesis exploring the role of emissions reporting in the shipping industry, highlighting the risks of non- compliance with stakeholder expectations and the opportunities it presents for shipping companies.

The Growing Importance of Emissions Reporting

Stakeholders across industries are increasingly expecting companies to disclose sustainability information and targets. This reporting allows financial institutions, industry customers, regulators, and other stakeholders to understand and benchmark company performance. The shipping industry has historically been resistant to disclose company-specific data; nevertheless, the industry is now facing rising stakeholder pressures to increase its transparency. However, the academic discourse on emissions reporting in the maritime sector is still limited, with a lack of research concerning emissions reporting’s impact on shipping companies’ modus operandi.

Understanding the Role of Emissions Reporting

To investigate the role of emissions reporting across the shipping industry, an emissions reporting index was compiled, consisting of the 50 largest stock-listed shipping companies globally. The index revealed variations in reporting efforts among shipping companies. Opposing viewpoints are discernible across geographical locations and shipping segments, with Northern European and companies in close proximity to the end consumer being more inclined to disclose emissions. In addition, the study employed interviews with 16 shipping companies and industry stakeholders to explore the varying reporting efforts across the industry and generate insights into stakeholders’ perceptions and expectations of emissions reporting.

Divergent Reporting Expectations

The study found a disparity in emissions reporting expectations among stakeholders. Companies are encouraged to adhere to diverse reporting standards based on their segments and geographical locations. Stakeholders exhibit divergent reporting expectations, ranging from regulatory compliance to the adoption of voluntary emissions reporting standards. However, it is challenging to impose stricter reporting requirements due to inadequate sanctions for non-compliance with stakeholder expectations. For instance, financial institutions are aiming to increase transparency across the shipping industry promoting reporting initiatives, but their effectiveness are arguably restricted as financing options remains available outside the initiatives.

Risks of Non-Compliance with Stakeholder Expectations

Non-compliance with stakeholder expectations exposes shipping companies to financial, reputational, and competitiveness risks, varying across shipping segments and geographical locations. The inadequate sanctions for non-compliance with stakeholder expectations pose a limited immediate risk to shipping companies; however, the materiality of these risks will increase significantly in the future. Neglecting emissions reporting in the short term can have adverse consequences for a company’s future competitiveness, due to risks of being a late adopter of emissions reporting.

Implications and Recommendations

The study’s findings have practical implications for shipping companies and industry stakeholders. Although non-compliance may not result in immediate consequences, companies should not disregard emissions reporting. Disclosing emissions allows companies to control their narrative, develop competencies, and improve long-term competitiveness. The potential benefits of emissions reporting must be weighed against the costs of establishing and maintaining reporting processes. In addition, given the divergent stakeholder expectations, two recommendations are proposed to create a more equitable competitive landscape. Emissions reporting efforts could be increased through a bottom-up approach in which regulatory requirements are increased, forcing stakeholders to raise their expectations. Alternatively, a top-down approach involving collaboration among financial institutions could impose appropriate sanctions on non-compliant shipping companies. This approach requires significantly more global collaboration among financial institutions than what is currently facilitated.

The Future of Emissions Reporting

The paper uncovers that emissions reporting is gradually converging towards a license to operate, as more stakeholders are demanding transparent emissions disclosure and voluntary reporting standards are becoming mandatory. It is argued that emissions reporting will become increasingly similar over time, as shipping companies are urged to adopt similar disclosure practices to maintain legitimacy and competitiveness. It is imperative that shipping companies understand the expectations of their unique stakeholder environment and not merely mimic the reporting practices of industry leaders. Furthermore, the study emphasizes that mandating uniform emissions reporting across the industry may impede companies’ ability to differentiate themselves and restrict their competitive abilities. Therefore, a balanced approach utilizing both mandatory and voluntary frameworks is recommended. Concurrent application of regulations and voluntary reporting standards can incentivize stakeholders to increase expectations without compromising shipping companies’ ability to differentiate themselves.

What’s next?

Emissions reporting in the shipping industry is gaining prominence as stakeholders demand more transparency and accountability. Although challenges exist in meeting divergent stakeholder expectations, shipping companies must recognize the risks and opportunities associated with emissions reporting. By embracing transparency and sustainability, companies can enhance their long-term competitiveness and contribute to a more sustainable maritime sector.

About the authors

Mikkel Holbæk Mørch is a Data Analyst at the product tanker company Hafnia BW. He is currently positioned in the Pool Management department, where his focus is centered on data analysis pertaining to the performance aspects of vessels as well as algorithmic modelling of pool earnings. He recently obtained his master’s degree in International Marketing & Management from Copenhagen Business School (CBS), where his research explored the connection between financial concepts and sustainability, particularly focusing on the shipping industry. Mikkel also holds a bachelor’s degree in Shipping and Trade from CBS.

Tobias Brunsgaard Børglum is an Investment Analyst at the alternative investment fund, Navigare Capital Partners, specializing in investment analysis and financial modeling of maritime investments. He recently obtained his master’s degree in Finance & Investments from Copenhagen Business School (CBS), where his research explored the connection between financial concepts and sustainability, particularly focusing on the shipping industry. Tobias also holds a bachelor’s degree in Shipping and Trade from CBS.

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan Jespersen is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics.

By Anna Le, Anne Sophie Rex, Elena Wilken Damm, Heng Zhang & Prof. Kristjan Jespersen

Main challenge

In the past, some asset managers stated they care about sustainability and human rights, but in practice, they rarely engaged on environmental, social, and governance (ESG) issues. However, this perception is outdated (Eccles & Klimenko, 2019). Eccles and Klimenko (2019), in a study of 70 senior executives at 43 global investing firms, argue that ESG is a main priority for investment managers, which means corporate leaders will soon take the responsibility of ESG performance requested by shareholders, if they did not do so already.

Corporate sustainability due-diligence (European Commission, 2022) and ESG reporting requirements (IFRS, 2022) are in the pipeline, which generates a new challenge for asset managers and for corporate executives — are they ready for the new trend? The answer is obvious: most asset managers and corporate executives are not ready for the new change, as they do not have relevant experience and expertise to avoid risk exposure of violations Indigenous People (IP) rights. For instance, two of the three largest investment firms in the world — BlackRock and Vanguard — are all involved in violations of the rights of the IP because of their portfolios (Butler, Allam & Wahlquist, 2020). Another example is the resignation of Rio Tinto’s CEO and senior executives after the Juukan Gorge violation. The violations of the rights of IP also have direct financial losses – two Norwegian wind farms lost their licenses, jeopardizing a USD 1.3 billion project (Buli & Solsvik, 2021).

International Work Group for Indigenous Affairs (IWGIA) is a global human rights organization that seeks to increase awareness and protect the IP rights (e.g., Free, Prior and Informed Consent (FPIC), land rights, resources (water pollution, fishing and hunting food resources, etc.), violence and killings). In this journey, one of IWGIA’s focus is to create a due-diligence tool related to IP rights that could be used in the dialogue with investors and asset managers.

An overview over the current situation

From the Danish C25, only two companies (Vestas and Ørsted) focus on the rights of IP in regards to land rights, territories and livelihood under threat (Vestas, 2021); both companies representing the energy sector. Thus, all other 23 top Danish companies that are part of different industries, e.g., healthcare, bio-technical, construction, etc. do not report on IP rights.

Consultancies in Denmark such as KPMG, Deloitte, EY etc., lack the transparency of their capabilities to advise on IP rights due-diligence process. However, these consultancies prove to have strong focus on IP rights in Canada and Australia.

There are numerous Internationally Recognized Standards and Frameworks that provide guidance to companies regarding sustainability reporting. However, few of them refer to IP rights (e.g., UNDRIP, Global Reporting Initiative (GRI), UN Guiding Principles on Business and Human Rights) and usually one framework does not cover all the IP rights. Moreover, these frameworks are voluntary, thereby risking that companies do not include the risk of IP in their sustainability reporting. This leads to minimal transparency for asset managers in the overall company assessment for investment.

A negative impact on IP’s lives can be found in various industries. The extractive industries of basic materials (mining), energy industry (water dams), agriculture and forestry show frequent cases of IP rights violations via lawsuits filed by IP. In this case both parts suffer: IP’s lives are extremely affected and businesses lose reputation as well as pay high fees.

As a way to cover IP rights, certifications that asses and accredit value chains are of great importance, and thus are beneficial for the due-diligence process. However, certifications landscape proves to be complex. They are distributed per industries and similarly to frameworks, only some of them include IP rights. Moreover, acquiring these is considered a complicated and lengthy task.

Recommendation

Based on the findings, a due-diligence tool that gathers a short checklist of the most important IP rights was created. Thus, it is recommended for IGWIA to use the due-diligence tool as a catalyst for conversations with asset managers and highlight relevant gaps in relation to risks of IP rights. By entering a dialogue and emphasizing full transparency from the companies, asset managers are able to make investment on an informed groundwork. Furthermore, IWGIA can help asset managers with an overview of those frameworks and certifications that include IP rights.

Undermining or ignoring a due-diligence process in relation to IP can raise future challenges leading to potential risk of dissatisfaction and complaints from IP or even legal disputes. Therefore, assets managers are advised to follow a complete due-diligence process when analyzing a potential investment. The due-diligence tool serves as a checklist to asset managers in their process to ensure they do not miss any important aspect on the IP risk. Furthermore, companies reporting on IP rights increase transparency and improve on ESG reporting, and thus become more attractive for investors as well as mitigate future indigenous risk.

About the authors

Anne Sophie Rex  is pursuing a Master’s degree in Business Administration and E-Business at the Copenhagen Business School (CBS).

Anna Le is pursuing a Master’s degree in Business Administration and Leadership at Roskilde University.

Elena Wilken Damm is pursuing a Master’s degree in Global Studies and Business Studies at Roskilde University.

Heng Zhang is pursuing a Master’s degree in Management (Finance Track) at the EM Lyon Business School.

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan Jespersen is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics.

By Paul Wieshammer, Emma Revilliod, Valentin Pugnère, Irene Sánchez & Dr. Kristjan Jespersen

Social sustainability offers developers, architects, and entire cities the opportunity to stand out in the urban development market. By creating outstanding neighbourhoods that meet people’s tangible and intangible needs, developers can not only enhance their ethical reputation, but also create financial value. However, social sustainability is a complex and multifaceted concept that is challenging to measure. To address this challenge, our group of student researchers developed the Urban Social Sustainability Measurement Tool, which provides a way to integrate the need to measure social sustainability in both the planning phase and after the neighbourhood is operational.

This tool was developed in the light of a market analysis we conducted in the Danish urban development sector, which involved both secondary data analysis and semi-structured interviews with twelve representatives of seven stakeholder groups: developers, the public sector, social housing, practitioners, pension funds, researchers, and certification bodies. The analysis showed that interest in the project was high across all stakeholder groups, and that four groups could be defined as potential users: real estate developers, pension funds, the public sector, and social housing. The tool was specifically developed to meet the needs of these potential users, with a high level of adaptability to each of their own criteria but also to each neighbourhood concerned.

The Urban Social Sustainability Measurement Tool is based on Life Cycle Assessment (LCA) and Multi-Attribute Value Theory (MAVT), and aims to measure urban social sustainability which we have defined as “achieving human well-being by meeting people’s tangible and intangible needs.” The tool’s framework classifies social sustainability into general factors, referred to as “categories,” and more specific factors, referred to as “indicators.” Each indicator is directly linked to one or more categories, similar to the structure used in LCA.

The Urban Social Sustainability Measurement Tool assigns sub-indicators [Price; Subsidies; Mixed Tenure; …] to each indicator, which are then measured to determine their performance. The sub-indicators are then assigned values between 0 and 1 depending on their proximity to the upper and lower limits. For instance, in the case of a minimisation, the closer the sub-indicator is to the lower limit, the more favourable it is considered to be. The values of the sub-indicators are weighted and summed to create a value for each indicator. The indicators are then weighted and summed to create a value for each category, and the sum of all categories gives the Urban Social Sustainability Score (URSUS). This scoring system provides a quantitative assessment of social sustainability, which can be used to compare different urban development projects and identify areas for improvement.

In order to accurately quantify social sustainability, the tool highlights the importance of the participation process throughout the planning phase. This process should be of exceptional quality, especially in redevelopment projects. This means that people from all affected strata of society must have an equal say in this phase. The results of the consultation must be incorporated into the development plans. As this factor is of high importance, the requirements for it are particularly high in the proposed model.

The Urban Social Sustainability Measurement Tool framework is a valuable contribution to the field of urban development, as it provides a standardised and measurable way to quantify social sustainability. The tool has the potential to make a significant impact on urban development processes by allowing developers to compare projects and make data-driven decisions to create more socially sustainable urban environments.

In order to foresee the next steps for our tool, we would like to highlight a few points that we believe are crucial to further developments:

• Real estate developers and pension funds are most likely to participate in the project at an early stage.
• For such a project to be successful, the tool needs to be accepted by the vast majority of the market, especially the public sector. If municipalities are brought on board, the future development of cities will benefit.
• Since social sustainability concerns society as a whole, social housing organisations and researchers must be heard in the process.
• As a result, our tool focuses on one key feature: “adaptability”. This is essential to ensure a comprehensive and effective measurement of each specific suburb in all its diversity.
• The concept of social sustainability is constantly evolving, which implies that indicators and categories must be periodically rewired to ensure that the tool is updated and accurately represents the current needs of society.

About the authors

Paul Wieshammer is currently pursuing a Master of Science in Management at the University of Mannheim. He is currently focusing his studies on the field of industrial decarbonisation, specifically within the semiconductor industry. He holds a Minor in ESG from the Copenhagen Business School, and has previously worked as an ESG analyst, advising institutional investors.

Emma Revilliod is currently pursuing a M.Sc. in Business and Development Studies at Copenhagen Business School. She holds a BSc. in Business Administration with a major in Applied Economics from HEC Montreal. She completed her BSc. with a minor in Political Science at Mc Gill University.

Valentin Pugnère is currently completing a Master in Management at EM Lyon with a specialisation in corporate strategy. He recently spent a semester at CBS where he studied political science and sustainable strategies. He is now preparing his Master’s thesis on the French State’s strategies to influence corporate governance notably in the scope of the national low-carbon strategy.

Irene Sánchez Clemente is part of a double master’s degree programme between the Polytechnic University of Valencia and the Technical University of Denmark. She is an industrial engineer specialising in environmental management. She also took sustainable-related courses at CBS last semester as part of her education, and she is currently developing her MSc thesis about the decarbonisation of the logistics sector.

Prof. Kristjan Jespersen is an Associate Professor in Sustainable Innovation and Entrepreneurship at the Copenhagen Business School (CBS). Kristjan Jespersen is an Associate Professor at the Copenhagen Business School (CBS). As a primary area of focus, he studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance. He has a background in International Relations and Economics.