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By Elisa Hugary, Jakob Wadel, Maximilian Styra, Camilla Feldmann, Anna Brusco and Prof. Kristjan Jespersen

Offshore wind energy has become a cornerstone of Europe’s energy transition. Capital is flowing at scale, capacity is expanding rapidly, and the sector is widely regarded as one of the most promising sustainable investment opportunities available. Yet the story is more complicated than the capital deployment figures suggest. Offshore wind development generates real environmental pressures on marine ecosystems: underwater noise, seabed disturbance, bird collisions, and increased vessel traffic. These are not exceptional side effects. They are inherent features of how offshore wind farms are built and operated. In principle, such impacts are assessed through Environmental Impact Assessments (EIAs). In practice, EIAs function primarily as regulatory compliance tools. They are project specific, differ in scope and methodology across jurisdictions, and rarely allow meaningful comparison between projects. The result is that investors tend to engage with marine environmental impacts only when regulation forces them to. This raises a central question: how can environmental impacts be assessed in a way that is both ecologically meaningful and practically useful for investment decisions?

The limits of project level EIAs

EIAs contain extensive environmental information, but they are not built for comparability. Two offshore wind farms may generate similar environmental pressures while describing them using entirely different metrics, assumptions, and formats. From an investor’s perspective, this makes it nearly impossible to assess relative environmental risk across assets or portfolios. Interviews conducted for this research confirm what many practitioners already suspect: environmental impacts typically enter financial decision making only through regulatory channels. Biodiversity concerns may lead to permitting delays, additional mitigation requirements, or project redesigns, all of which carry direct financial consequences. But outside these regulatory triggers, environmental information remains largely disconnected from investment analysis. Closing this gap requires a more structured and consistent approach to assessing environmental impacts.

Thinking at the asset level

Environmental pressures do not arise at the “project level.” They originate from specific components and activities across the offshore wind lifecycle. Foundations, turbines, cables, and vessels each generate distinct pressures during construction, operation, and decommissioning. Adopting an asset level perspective makes it possible to identify recurring pressure patterns across offshore wind projects, even when individual EIAs describe them differently. When these cause-effect pathways are mapped systematically, a striking pattern emerges: a limited number of environmental pressures occur repeatedly across assets and lifecycle phases, and they are consistently supported by scientific evidence. This asset level mapping provides a clearer and more systematic understanding of how offshore wind infrastructure interacts with marine ecosystems.

Five recurring pressure categories

Across asset levels and lifecycle phases, five pressure categories emerge as both robust and material: bird collisions, noise pollution, seabed disturbance, vessel pressure, and water contamination. Each of these is generated by multiple assets and occurs across different stages of offshore wind projects. While they are partially addressed in existing regulation, they are not assessed in a standardised or comparable way. Identifying these recurring categories is a crucial step toward building a consistent environmental assessment framework.

From pressures to a comparable impact score

Translating environmental pressures into investment relevant information requires standardisation. This research develops a scoring mechanism for precisely this purpose: the Offshore Wind Environmental Impact Score (OWEIS). The logic is deliberately straightforward. Environmental pressures are first quantified using established models already commonly applied in EIAs. Because these impact values are expressed in different units and scales, they are then standardised to ensure comparability across pressure categories. Finally, the standardised values are weighted using the ENCORE scale according to their ecological materiality and aggregated into a single, transparent score. The OWEIS does not aim to replace detailed ecological analysis. Rather, it enables relative comparison across offshore wind assets, allowing investors to assess which projects are likely to face higher or lower environmental risk under comparable conditions.

What this means for investors

Environmental pressures become financially relevant through transition risk. Projects with higher environmental impacts face a greater likelihood of permitting delays, stricter mitigation requirements, reputational pressure, and future regulatory tightening. Each of these factors can affect project timelines, costs, and ultimately asset valuations. The reverse also holds. Projects with lower environmental impact profiles tend to be more resilient: less exposed to regulatory intervention, less prone to disruption, and better aligned with evolving sustainability expectations. From an investment perspective, this translates into more predictable cash flows and lower downside risk. By integrating asset level environmental data into due diligence and portfolio analysis, investors can move beyond compliance driven assessments and begin incorporating environmental risk more systematically into capital allocation decisions.

Bridging marine ecology and finance

Offshore wind is essential for decarbonisation. But its environmental footprint cannot be treated as an afterthought. Current assessment practices generate valuable ecological data, yet they fall short of what investors need: consistent, comparable information that can inform capital allocation. An asset level approach, combined with standardised scoring, offers a practical way forward. It does not resolve every tension between energy transition ambitions and marine conservation. But it does provide a foundation for more informed investment decisions and, ultimately, for a more honest accounting of what offshore wind development costs

About the Authors  

Elisa Hugary is finalizing her MSc in People and Business Development at Copenhagen Business School. During her electives she took a minor in Building Organizations for Sustainable Futures, working closely with researchers for the Making Oceans Count project, which built the foundation for this blog post. Alongside her studies Elisa is working as a Junior Sustainability Consultant in an international logistics company where she supports sustainability reporting and initiatives.

Jakob Wadel is currently completing his MSc in Management at WU Vienna. During his exchange semester at Copenhagen Business School (CBS), he focused on consulting, management, and digital transformation, contributing to the Making Oceans Count project underlying this blog post. Alongside his studies, he has gained experience in finance and energy-related roles, including supporting investment analyses, developing controlling systems for solar projects, and contributing to financial planning. Currently, he is gaining further first-hand experience in Austria’s energy industry, working in an in-house consulting environment.

Maximilian Styra is currently completing his MSc in Management at WU Vienna, after earning his Bachelor’s degree in Business Administration from the University of Münster. During his Erasmus semester at Copenhagen Business School (CBS), he focused on the strategic integration of sustainability into business models and contributed to the Making Oceans Count project underlying this blog post. Alongside his studies, he has been working in real estate project development in Germany, where he explores how long-term value creation can be aligned with sustainability and environmental responsibility.

Camilla Feldmann is currently pursuing her MSc in Business Administration and Organisational Communication at Copenhagen Business School (CBS). Alongside her core programme, she has chosen the International Business and Society (IBS) profile, where she has focused on transformation, sustainability, and international collaborations and responsibilities. Through her studies, Camilla has developed a strong interest in how businesses navigate complex societal challenges and balance commercial objectives with sustainable and responsible practices in a global context.

Anna Brusco is in the final semester of her MSc in Sustainability Management at the University of Southern Denmark. During her electives semester at Copenhagen Business School (CBS), she focused on sustainable investing and responsible business, contributing to the offshore wind consulting project featured in this blog post. She is currently an ESG Data Intern at Matter, working with sustainability data for investors. Her master’s thesis explores geospecific data integration in sustainable finance.

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 Walter Bachmann, Prof. Kristjan Jespersen 

For years, green bonds captured the imagination of investors and issuers alike, promising a genuine win-win outcome: capital would flow into projects with measurable environmental benefits, and the firms raising that capital could do so at a lower cost than in the conventional bond market. This attractive combination, widely referred to as the green premium or greenium, implied that investors were willing to accept slightly smaller yields in exchange for the satisfaction of financing climate solutions. The narrative proved compelling. Policymakers welcomed it as evidence that financial markets could help close the climate-finance gap, companies used it to signal corporate responsibility, and asset managers viewed it as a practical way to align portfolios with sustainability mandates. 

Early empirical studies appeared to confirm the promise. Analyses of primary-market data from the mid-2010s reported yield discounts of three to eight basis points for green instruments relative to comparable vanilla issues. As a result, the labelled market expanded rapidly. By 2023 outstanding green bonds totalled roughly six hundred billion dollars, and the structure migrated from being a niche offering to becoming a standard tool for investment-grade corporations, financial institutions, and sovereign treasuries. 

Whether the pricing advantage survived this remarkable expansion is the central question addressed here. This study assembles an issuance-level dataset covering almost fifty thousand bonds launched between 2015 and 2025 in Europe, North America, and China, of which around 2 thousand were formally labelled as green. These three regions dominate both global bond volumes and global greenhouse-gas emissions, so results carry relevance beyond local markets. Ordinary least squares regressions and issuer-fixed-effects panel models are employed to estimate the difference in initial yield spreads while controlling for rating, tenor, currency, coupon type, and issuer characteristics.  

Results from the cross-sectional ordinary least squares model reveal a clear trend. From 2015 through 2017 the coefficient on the green label is negative and statistically different from zero, confirming that green bonds were indeed issued at lower yields. Yet the absolute size of the discount narrows every year, falling from roughly six basis points in 2015 to a statistically negligible level by 2020. By 2024 the coefficient has turned positive, indicating that issuers of green bonds now pay a slightly more. Confidence intervals widen in the later years, suggesting growing dispersion in investor valuations as the market matures and supply becomes abundant. 

Panel estimates reinforce the narrative but add nuance. Once constant issuer characteristics are stripped out, the green-bond premium oscillates around zero with greater variability than in the pooled sample. The discount disappears roughly two years earlier than in the cross-sectional case, while the subsequent up-turn begins in 2021 and reaches significance in 2024. These findings imply that unobservable differences between repeat issuers played a role in the early period but faded as disclosure standards converged and investors gained experience with the product. Furthermore, sectoral breakdowns deepen the picture. When combined the high-emitting industries such as oil and gas, metals, and chemicals never achieve a material greenium. Their environmental projects may be essential for the transition, yet investors appear unconvinced that a green label overrides broader balance-sheet exposure to carbon risk. 

Three structural forces explain the vanishing greenium. First, supply has caught up with demand. When labelled bonds were scarce, impact-oriented investors competed for limited paper, pushing up prices. By the early 2020s the market had produced enough volume that scarcity ceased to be a driver. Second, transparency improved. Harmonised taxonomies, second-party opinions, and post-issuance allocation reports reduced information asymmetry, leaving little hidden value for investors to monetise. Third, macroeconomic conditions shifted. Rising interest rates, elevated inflation uncertainty, and renewed focus on credit fundamentals compressed risk premia across asset classes, making non-pecuniary benefits a luxury many investors were unwilling to fund through lower yields. 

The erosion of the pricing advantage has practical consequences. For issuers, the green label no longer reduces interest expense in a predictable way, but it still confers reputational capital and may help diversify the investor base. Regulators are also moving toward mandatory sustainability disclosure, implying that future issuance choices will be influenced as much by compliance considerations as by cost. For investors, the disappearance of the yield concession heightens the importance of rigorous impact assessment. In the contemporary market the premium that matters is credibility. Transactions backed by verifiable environmental metrics, stringent use-of-proceeds frameworks, and transparent governance continue to attract strong demand, even if they no longer command higher secondary-market prices. 

The green-bond market has transitioned from novelty to norm. The financial incentive that once spurred issuers has largely evaporated, replaced by intangible benefits linked to brand value, stakeholder expectations, and regulatory readiness. Yet the instrument retains strategic importance as a conduit for climate finance. Its standardised documentation, earmarked proceeds, and investor familiarity make it uniquely suited to mobilise private capital at scale. Policymakers seeking to revive any lost cost advantage may consider tax incentives, credit guarantees, or structured co-financing that reward measurable emissions reductions. Ultimately, the path from green label to green impact will depend less on marginal changes in coupon rates and more on the integrity and transparency of the projects being financed. 

About the Authors  

Walter Bachmann recently completed a MSc Finance and Investments with a Minor in Environment, Social, and Governance (ESG) at Copenhagen Business School (CBS). During his time as a student, he also worked as a research assistant for the Nordic ESG Lab and as M&A Analyst at LNP Corporate Finance. This September he will commence his second master’s degree at Imperial College Business School, where he will dive deeper into sustainability and financeWith a finance degree already in hand, the additional qualification from Imperial, combined with his prior ESG experience, positions him well to advance in sustainable finance. 

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 Prof. Kristjan Jespersen,  Justus Claudius Ernst and Áron Radványi

Today’s global environment is increasingly volatile, uncertain, complex, and ambiguous (VUCA). This heightened uncertainty underlines the importance of organizational resilience—how companies prepare for and respond to adverse events. Frequent crises in the 21st century highlight severe consequences when disruptions occur in our fragile and interconnected socioeconomic systems. Companies have a dual responsibility: minimize their contributions to disruptions and mitigate their impacts on their own operations. 

The Corporate Sustainability Reporting Directive (CSRD) mandates companies to perform Double Materiality Assessments (DMA). These assessments help identify and report impacts, risks, and opportunities (IRO) related to sustainability. Additionally, CSRD requires businesses to disclose how resilient their strategies and business models are. Despite these regulations, many companies lack a clear method for integrating DMA into resilience-focused strategies. 

DMA as a Strategic Learning Loop 

Our research found that DMA, when used strategically, becomes more than a mere reporting requirement—it transforms into a catalyst for continuous learning, innovation, and resilience. Our findings are based on 15 semi-structured interviews with representatives from 13 C25 companies and two sustainability advisory firms. Using a resource-based view and the dynamic capabilities framework, we analyzed the data to understand DMA’s strategic potential for organizational resilience. 

Instead of a one-off annual exercise, strategically applied DMA creates a continuous learning loop. Regularly reassessing environmental, social, and governance (ESG) issues and stakeholder concerns leads to ongoing improvements. Each assessment cycle provides insights that inform decision-making, helping companies adapt proactively to emerging sustainability trends and stakeholder expectations. This process institutionalizes a habit of learning and adaptability within organizations. 

DMA as a Strategic Knowledge Asset 

Insights gained through DMA become strategic intangible assets. By understanding stakeholder priorities, environmental risks, and social impacts deeply, companies generate knowledge that fulfills the VRIO criteria: 

• Valuable: Helps identify and mitigate risks. 

• Rare: Unique due to specialized DMA methods. 

• Inimitable: Built on unique stakeholder relationships and proprietary data. 

• Organized: Fully integrated into the company’s operational systems. 

These insights provide competitive advantages. Sustainability practitioners can leverage DMA to generate proprietary intelligence, such as early identification of environmental risks or emerging consumer concerns ahead of competitors. 

DMA Enhancing Dynamic Capabilities 

Treating DMA strategically strengthens a company’s dynamic capabilities—its ability to adapt rapidly to change. Our study found that firms deeply engaged with DMA: 

• Enhance their sensing abilities by scanning continuously for risks and opportunities. 

• Improve their seizing capabilities by integrating DMA insights into business operations. 

• Strengthen their transforming abilities by adjusting operations or products based on new sustainability insights. 

Companies that approach ESG as merely a compliance checklist often lack the agility required to respond to new challenges. Conversely, those strategically leveraging DMA foster cross-departmental collaboration and innovation, increasing their overall resilience. 

The Integrated DMA Ecosystem 

Embedding DMA into core corporate processes further enhances organizational resilience. Instead of being confined to sustainability teams or annual reports, DMA becomes integrated into broader corporate strategy, risk management, governance, and stakeholder engagement. This holistic integration ensures organization-wide alignment in monitoring and responding to ESG issues, enabling proactive identification and mitigation of risks. 

For example, early detection of supply chain vulnerabilities or community concerns through DMA prompts preemptive actions, cushioning potential crises. A proactive approach involving cross-functional workshops, regular updates to the materiality matrix, and executive goals linked to sustainability outcomes transforms companies from reactive to proactive entities. 

Conclusion 

Strategically embracing DMA shifts the focus from mere compliance to building long-term organizational resilience. Integrating DMA into business strategy and routine learning enables companies not just to meet regulatory requirements but also to proactively anticipate and adapt to sustainability challenges. This resilience-focused approach ultimately unlocks sustained competitive advantages in an increasingly volatile world. 

About the Authors 

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.  

Justus Ernst recently completed a Master’s degree in Accounting, Strategy and Control at Copenhagen Business School (CBS), alongside a CEMS Master’s in International Management. During his studies, he worked at Jabra, focusing on pricing and commercial excellence. In September, he will join Valcon as a Graduate Management Consultant.

By Prof. Kristjan Jespersen, Oda Solend and Anna Sophia Burri

In today’s global landscape, geopolitical risk (GPR) is rising in both frequency and intensity. War in Ukraine, rising U.S.-China tensions, trade disruptions, resurgent nationalism, and mounting global uncertainty all challenge the stability of investment environments. For investors, this creates a turbulent decision-making climate. At the same time, sustainable investments are becoming a central tool in the global response to climate change. Recognized by both policymakers and markets, they help redirect capital toward renewable energy, green infrastructure, and ethical developments. Investment into sustainable assets has grown exponentially, from $13.3 trillion in 2012 to over $30 trillion by 2022, with forecasts pointing to $40 trillion by 2030. But what happens to these investments when geopolitical instability rises?
This tension between growing climate urgency and increasing geopolitical volatility builds the starting point of our master thesis. Existing research primarily explores their relationship through quantitative models, focusing on market volatility or asset prices. A crucial gap, however, remains: How do sustainable investors assess GPRs? And how does this influence their investment decisions? That’s what we set out to explore.

How We Studied It
To unpack how GPR influences sustainable investments, we conducted a three-part qualitative study:

• GPR Mapping: We developed a comprehensive typology of 63 specific GPRs, organized into three overarching categories: geography, politics, and macroeconomics. This mapping helped us ground the study and design the next stages.
• Scenario-Based Workshop: We facilitated a workshop with six sustainable investors, using a geopolitical scenario to explore real-world sensemaking and decision-making processes.
• In-Depth Interviews: We conducted interviews with five sustainable investors and three geostrategic consultants to deepen our understanding of the internal and external dynamics shaping investment decisions.

What We Found
Our findings show that GPR influences sustainable investments in two key ways: through material disruptions and investor interpretations.
Investors increasingly see GPR as a structural and unavoidable factor in investment processes and decision-making. GPR shapes not just which investments are made, but how they are assessed, managed, and adapted over time. In many cases, decisions are influenced by perceived threats as much as actual events. We found that GPR influences decisions both before and after capital is committed. Prior to investment, GPR can act as a hard stop or shift strategic focus toward lower-risk regions. After commitment, especially in illiquid assets like infrastructure, investors adapt through ongoing monitoring, stakeholder engagement, or scenario planning.

However, the way investors respond to GPR is highly context-dependent. Some firms rely on informal, individual-level assessments, while others have formalized internal structures and public affairs teams. Organizational structures, exclusion criteria, previous experiences, informal norms, and external mandates all shape how investors interpret and act on GPR.

In other words, GPR influences both the rationale and the reality of sustainable investing, and it does so in ways that are filtered through both institutional pressures and personal judgment.

Interpreting Complexity: Our Contribution
By combining two theoretical perspectives – neo-institutional theory and sensemaking theory – we were able to connect the dots between organizational structure and individual interpretation shaping GPR assessments of sustainable investments.

Our thesis contributes to the underexplored literature on GPR and sustainable investing by showing how investors interpret, assess, and respond to geopolitical events in a world of growing complexity. Instead of treating geopolitics and geoeconomics as separate, we show how investors perceive macroeconomic and political threats as intertwined.

We also highlight the limits of quantification: GPR doesn’t always lend itself to measurable indicators. Its ambiguity requires judgment, narrative framing, and forward-looking models. Our study shows how qualitative inputs, like scenario planning, expert insight, and internal considerations, are crucial to making sense of geopolitical uncertainty.

By combining insights from both organizational structures and individual sensemaking, our thesis answers recent academic calls to bridge the macro and micro levels of analysis.
Together, these lenses allowed us to offer qualitative insights into the “how” behind GPR assessment and decision-making – complementing the dominant focus on quantitative research in this field.

What Sustainable Investors Can Do
In practice, sustainable investors should:

• Actively monitor GPR, both through one-off assessments and ongoing tracking.
• Use scenario analysis to explore potential future developments and translate qualitative inputs into quantitative investment impacts, thereby increasing both awareness and preparedness.
• Develop internal structures for coordination between investment teams and risk experts.
• Embrace nuance: GPR is interpretive, contextual, and messy. Trying to reduce it to a single metric can be misleading.
• Identify strategic opportunities: GPR can open up space for leadership and long-term impact. Turning uncertainty into advantage is a hallmark of resilient investing.

Final Thought
In an era where the world is heating up – geopolitically and environmentally – GPR returns as a top concern among sustainable investors. They need frameworks to understand, tools to adapt, and strategies to act amid uncertainty. This thesis is our small step toward helping sustainable investors navigate that uncertain future.

About the Authors 

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.  

Oda Solend recently completed her Master’s degree in International Business and Politics at Copenhagen Business School (CBS), with a minor in ESG. She will join KPMG as a Risk and Regulatory Consultant in August. Previously, she worked at Novo Nordisk, supporting innovation initiatives in the life science ecosystem, and volunteered with femella, a network organization dedicated to empowering female students and young professionals in their careers and personal development.

By Prof. Kristjan Jespersen, Cecilie Duch and Nathalie Fichte

In an era marked by accelerating ecological degradation and increasing demand for sustainable economic models, the field of sustainable finance is experiencing a paradigm shift. While CO2 emissions have long dominated environmental metrics in investment decisions, this focus captures only a small part of the sustainability agenda. While important, this narrow focus captures only a fraction of the sustainability agenda. Integrating circular economy (CE) principles offers a broader and more regenerative framework, complementing carbon metrics with deeper insights into material flows, resource efficiency, and long-term system resilience.  

The inclusion of circularity into portfolio design 

The global economy remains largely entrenched in a linear ‘take-make-waste’ paradigm, wherein resource extraction and waste generation proceed with minimal regard for ecological thresholds. This cradle-to-grave model has propelled humanity toward multiple breached planetary boundaries (Rockström et al., 2023). The ‘Limits to Growth’ report (Club of Rome, 1972) warned already over fifty years ago of the environmental consequences of indefinite economic expansion. Today, its predictions are no longer hypothetical.  

In response, the circular economy proposes a fundamental shift in economic logic—from throughput maximization to regenerative value creation. Circularity emphasizes design for durability, reuse, repairability, and closed-loop systems, aiming to decouple growth from environmental harm. Embedding these principles into investment logic may reshape how capital allocation drives systemic change. 

Development of the Circular Investment Tool (CIT) 

To effectively integrate circularity metrics into portfolio design, a framework for investment screening in the following called CIT was developed. This framework blends automated data analysis with manual review, enabling a more complete and nuanced assessment based on publicly available information.  

The CIT is designed to integrate seamlessly into investment workflows and includes four key phases: 

1. General Requirements: Includes sector definitions, financial benchmarks, and minimum ESG thresholds. 

2. Automated Analysis: Uses publicly available data to assess indicators such as material circularity, product lifespan, and design-for-disassembly. 

3. Manual Review: Addresses gaps in automated data through qualitative evaluation of transition narratives and disclosures. 

4. Active Ownership: Encourages investor engagement with portfolio companies to foster long-term improvements in circularity performance. 

This integrated approach bridges the gap between data-driven screening and investor stewardship, enhancing both rigor and strategic influence. 

Main Findings 

The findings present both challenges and opportunities for integrating circularity into sustainable finance: 

• Lack of Standardization 

A recurring theme was a conceptual ambiguity around circularity, as different practitioners interpreted it in varying ways. There is currently no standardized or universally accepted approach to assessing circularity in investments, which makes its scalability more difficult. 

• Proxy Reliance 

GHG emissions remain the default proxy for sustainability, overshadowing the complexities of assessing and defining nature and how it is affected by human-led business activities. 

• Challenges around data quality and availability 

Other prominent challenges were the quality and availability of sustainability and specifically circularity data provided by companies. This was highlighted as an issue limiting integration into portfolio design. 

• Proof of Concept – CIT in Practice  

Applying the CIT, we constructed a portfolio of 39 consumer goods companies and benchmarked it against sector-specific indices. The circular portfolio achieved comparable financial performance relative to traditional benchmarks but demonstrated greater resilience during periods of market volatility. This suggests that circularity metrics may bolster risk-adjusted returns and improve foresight in capital allocation. 

• Alternatives of the CIT 

The discussion of the research elaborates on potential adaptations of the CIT, including the expansion of the manual analysis in regard to its feasibility and added value, the third-party verification of data and its impact on reliability, transparency, and data quality and availability, and the aspect of active engagement 

Implications and Future Research 

The conducted research explores the reasons behind the absence of a standardized understanding of circularity within the investment landscape, suggesting that this may be partly due to the concept’s relative immaturity. It also highlights the growing relevance and potential influence of circularity in a world marked by geopolitical uncertainty and complex challenges. In addition, the research examines the composition of the designed portfolio, which leans more towards companies demonstrating transitional circular potential rather than incorporating companies with fully circular business models. This underscores the significance of corporate initiatives and forward-looking commitments in advancing circularity. 

While the study focused on the consumer goods sector, the CIT was designed with cross-sector applicability in mind. Sectoral expansion should be guided by materiality considerations. Promising applications include construction, industrial manufacturing, and agriculture, where resource intensity and environmental impact are significant. 

Integrating circularity into investment decision-making does not compromise financial outcomes. On the contrary, it offers a pathway to enhanced risk mitigation, portfolio resilience, and alignment with long-term sustainability goals. As data quality improves and circular economy principles become institutionalized, tools like the CIT will be essential in shaping the next generation of sustainable investing. 

About the Authors 

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.  

Cecilie Duch has a HD in business administration and accounting, alongside a Cand.merc in strategy, organization and leadership topped with a minor in ESG from Copenhagen business school (CBS). She has a lead role as a sustainability auditor and consultant. She consults on topics such as ESG, VSME and CSRD reporting, internal sustainability controlling environments and audits of annual sustainability reports. Academically she focuses on sustainability in the business sphere spanning reporting, integration, and responsible investments.

Nathalie Fichte recently completed a MSc in Strategy, Organization, and Leadership with a Minor in Environment, Social, and Governance (ESG) at Copenhagen Business School (CBS). She was working in sustainability consulting and assurance and has prior experience in the area of international development cooperation. This August, she will be continuing working within the field of ESG through joining the department of Management, Society, and Communication at the center for sustainability at CBS as a research assistant. Her academic interest spans from circular economy, ESG reporting, to sustainable finance topics.