The NYU Stern Center for Sustainable Business (CSB) Research Grant program funds academic research in a variety of areas related to sustainable business. CSB Research Grants are awarded to Faculty and Ph.D. students in pursuit of research that advances CSB’s mission of ensuring current and future business leaders develop the knowledge and skills to embed sustainability in core business strategy so they can reduce risk; creating competitive advantage; and developing innovative services, products, and processes while building value for society and protecting the planet.

We are pleased to announce the 2024 grant awardees:

• Do firms mitigate climate impact on employment? by Viral Acharya, C.V. Starr Professor of Economics

• Co-Adoption of Green Technologies and Financial Constraints by Steve Zhang, PhD Student in Marketing

• Underestimation on the Pollution of Digital Consumption, by Raina Zhang, PhD Student in Marketing

• Bundled Loyalty Discounts and Physician-Administered Drugs, by Chiara Gardenghi, PhD Student in Economics

• ESG Favoritism in Mutual Fund Families, by Mari Subrahmanyam, Charles E. Merrill Professor of Finance & Economics

 

Please find the project descriptions below:

 

Do Firms Mitigate Climate Impact on Employment?

by Viral Acharya

C.V. Starr Professor of Economics, Finance Department
Using establishment-level data, we show that firms operating in multiple counties in the United States respond to heat-related damages by reducing employment in the affected locations and increasing it in unaffected locations. Such employment reallocation increases with the severity of damages, is stronger among larger and financially stable firms with more ESG-oriented investors, and is aided by credit availability and competitive labor markets. Reallocation is observed also at the extensive margin of opening of establishments. In the cross-section of industries and the choice of reallocation counties, firm response appears to be aimed at preventing heat-related decline in productivity.  In contrast, single-location firms simply downsize in response to heat-related damages. Overall, the mitigation response of multi-establishment firms acts as a "heat insulator" for the economy by reducing the impact of heat shocks on aggregate employment even as it redistributes activity spatially.
 

Co-Adoption of Green Technologies and Financial Constraints
by Steve Zhang
Ph.D. Student, Marketing Department

While green durable technologies are increasingly popular, their high upfront costs, even with government subsidies, complicate the study of their co-adoption and the accurate determination of complementarities between products. Past research, such as Lyu (2023), has investigated complementarities using aggregate data at the zip code level. However, this approach does not account for individual characteristics, such as financial situations, which are crucial for understanding co-adoption decisions. This research aims to explore the effects of financial situations on the co-adoption and complementarities of durable green technologies, and the extent to which they can benefit from government subsidies, using a dynamic structural model that assumes agents are forward-looking and subject to financial constraints. Preliminary analysis has shown positive complementarities, but the magnitude significantly decreases if the two adoptions occur within five years, suggesting the presence of financial constraints. The goal is to accurately determine the complementarity and better evaluate the impact of subsidies and different subsidy schedules.

 

Underestimation the Pollution of Digital Consumption
by Raina Zhang
PhD Student, Marketing Department

The rapid advancement of digital technologies, especially Artificial Intelligence (AI), has significantly transformed consumer lifestyles. Despite the technological benefits, the environmental toll of digital consumption, through energy-intensive operations and e-waste, raises critical concerns. This project investigates consumer awareness and estimation of the environmental impacts of digital consumption (e.g., AI). We hypothesize that consumers often underestimate or completely ignore the environmental costs associated with digital consumption. This oversight prompts them to indulge in excessive digital behaviors, many of which are unnecessary. This is due to the intangible nature of digital consumption and the physical and psychological distance from the technological infrastructure that facilitates it. Such detachment makes it challenging for consumers to imagine the environmental pollution of their digital activities. Through lab and field experiments, we aim to measure consumer perceptions of CO2 emissions from various digital activities against actual data. Experiments will assess perceived emissions from digital versus physical consumption and the impact of different modes of digital consumption (e.g., downloading vs. streaming) on these perceptions. Additionally, we will explore interventions aimed at reducing the underestimation of environmental impacts by making the environmental costs of digital consumption more visible to consumers. Our research seeks to provide actionable recommendations for consumers, businesses, and policy makers to promote more sustainable digital consumption practices.

 

Bundled Loyalty Discounts and Physician-Administered Drugs
by Chiara Gardenghi
Ph.D. Student, Economics Department

In many industries, multi-product firms offer bundled loyalty discounts to buyers who purchase a substantial share of their entire product line. These contracts may serve to increase output by fostering a ‘loyalty’ relationship with buyers, or to foreclose competing sellers, including those with superior products. The study will examine the welfare implications of such discounts in the context of physician-administered treatments, which medical providers directly purchase and administer to patients. Specifically, it will focus on child and adult immunizations, prime examples of physician-administered treatments where bundled discounts are commonplace.

The research begins by developing a stylized model that incorporates the essential trade-offs associated with bundled discounts. In the model, pharmaceutical companies set prices and discounts for multiple vaccines, while providers decide on the quantity and quality of products to purchase, balancing the health benefit for patients against their own financial interests. Preliminary simulations show that bundled discounts may increase providers’ purchases of vaccines, limit the quality of products available to patients, and potentially raise single product prices.

It then turns to estimating providers’ demand and manufacturers’ supply, using all-payer claims data from Colorado. I leverage heterogeneity in the pool of eligible patients across providers, as well as changes in market structure and manufacturers’ vaccine portfolios, to identify key patterns in the data that are consistent with bundled loyalty discounts. Parameter estimates will be used to assess the welfare implications of banning discounts on the uptake of non-compulsory vaccines, on providers’ purchasing decisions, as well as on pharmaceutical companies’ pricing and innovation incentives.

 

ESG Favoritism in Mutual Fund Families
by Marti Subrahmanyam
Charles E. Merrill Professor of Finance & Economics, Finance Department

This research project explores the impact of organizational dynamics within the expanding Environmental, Social, and Governance (ESG) open-end fund industry, which has been gaining importance. As reported by Morningstar, in 2023 total net assets invested in U.S. sustainable funds exceeded $300 billion.1 Furthermore, ESG funds are expected to constitute 21.5% of total global assets under management by 2026, according to a study by PwC.2 Given these growth expectations, we analyze whether ESG mutual funds are subject to “favoritism” by their fund families. In this context, we explore how important ESG funds are for the fund industry as a whole and for individual fund families. In particular, we study whether specific mechanisms are applied within the fund families to support ESG funds at the expense of other funds. Such mechanisms have been previously identified in the academic literature for high-value funds, i.e., conventional funds that provide more fee income or high inflows for the management company of the fund family. Typical methods to direct superior performance towards specific funds are preferential IPO allocations and direct trading across funds. In the context of ESG funds, we study whether ESG funds are generally treated similarly to high-value funds by the fund family. We also explore whether the ESG preferences of investors and the relation between ESG fund performance and inflows affects the extent of cross-subsidize on in the fund industry. Overall, this project fosters our understanding of the mutual fund industry in the context of ESG investing, which has become a major issue in the global asset management industry.

 

Additional information about the CSB Research Grant program is available here.