NYU Stern’s Center for Sustainable Business (CSB) envisions a better world through better business. This year CSB issued a research grant program to complement CSB research and to expand beyond our projects. CSB offers faculty and Ph.D. research grants related to our mission: to ensure current and future business leaders develop the knowledge and skills to embed sustainability in core business strategy so they can reduce risk; create competitive advantage; develop innovative services, products, and processes; while building value for society and protecting the planet. To learn more about the CSB Research Grant program, click here. Next year’s deadline is January 31, 2021. We are pleased to announce the following awardees: 

• Do Consumers Value Sustainable Brands? Empirical Evidence from Mobile Trajectory Data, Eunkyung An, Xiao Liu, Baohong Sun, Natasha Zhang
• Reducing Wasteful Purchases by Addressing Substitute Neglect in Purchase Decisions, Tom Meyvis, Randy Yang Gao
• Why do individuals create “sustainable” companies versus traditional companies? Matthew Lee
• Climate Risk and Portfolio Allocation, Johannes Stroebel, Quinn Maingi, Julia Selgrad
• Measuring and Modeling Deforestation, Paul Scott
• Climate Finance and Disclosure, Mary Billings, Han Yan

Please find the project descriptions for the proposals below:

Do Consumers Value Sustainable Brands? Empirical Evidence from Mobile Trajectory Data, Eunkyung An, Xiao Liu, Baohong Sun, Natasha Zhang
In this research, we study consumers’ preferences for sustainable brands and achieve two objectives. First, we quantify consumers’ preferences for sustainable brands by investigating their offline store visit behaviors. We leverage a unique and granular data set that tracks individual mobile trajectories in two large cities of the United States. We measure the share of visits to stores of sustainable brands and the impact of opening a store of sustainable brands on consumers’ shopping trajectories. Second, we create a customer segmentation model based on how frequently consumers visit the stores of sustainable brands. The model is built upon network embedding, a machine learning algorithm that converts the mobile trajectory data into an undirected graph structure and heterogeneous networks. Our results can inform marketers on how to target sustainability-conscious consumers and how to choose the store location of sustainable brands.

Reducing Wasteful Purchases by Addressing Substitute Neglect in Purchase Decisions, Tom Meyvis, Randy Yang Gao
Many material purchases we make as consumers end up going unused, which has negative implications for consumer welfare (who wasted money and storage space), firms (who are faced with dissatisfied customers and product returns), and the environment (which is being taxed by the production, transportation, and disposal of these unnecessary products). In this project, we aim to examine the biases underlying these erroneous consumer decisions and test possible interventions to induce consumers to avoid these errors. Specifically, we propose that buyers often overestimate how often they will use a product that’s for sale (e.g., a souvenir mug) because they fail to sufficiently take into account the items they already own in that category (other mugs), a phenomenon we label substitute neglect. As a result, consumers end up purchasing products that they think they will use, but end up gathering dust, being returned, or filling up landfills. We aim to first document how substitute neglect produces a systematic overestimation of usage frequency, followed by a test of different interventions to debias these judgments and improve consumer decision making.

Why do individuals create “sustainable” companies versus traditional companies? Matthew Lee
The purpose of this research is to answer three questions related to the phenomenon of sustainable entrepreneurship in the CPG industries. Why do individuals create “sustainable” companies versus traditional companies? In what ways do the strategies of these companies differ from traditional companies? Finally, what are the performance implications of this entrepreneurship, both for the companies being founded and the other companies with which they collaborate and compete?

Climate Risk and Portfolio Allocation, Johannes Stroebel, Quinn Maingi, Julia Selgrad
We wish to investigate whether investors’ beliefs about climate change affect their portfolio allocations. In particular, when investors believe climate change is more probable, does this lead to portfolio reallocation decisions and, if so, into which assets? We also wish to explore heterogeneity in allocation decisions, both in the time dimension and in the cross-section: are shifts in allocations stronger or different in more recent years, and what investor characteristics influence portfolio allocations’ sensitivities to climate change beliefs? We also intend to use our results to construct a portfolio to hedge against climate change risk.

Measuring and Modeling Deforestation, Paul Scott, Ted Rosenbaum, Eduardo Souza-Rodrigues, Adrian Torchiana
To understand the impact of changes in food demand and agricultural policies, we must understand how agricultural supply and land use change responds to market conditions (especially prices). Nowhere is agricultural expansion more impactful than Brazilian Amazonia, but direct evidence on the price responsiveness of Amazonian deforestation is surprisingly difficult to come by. We will estimate a structural model of deforestation in Brazil and use it to evaluate the impacts of policies such as agricultural subsidies, biofuels support, and land protection.

Climate Finance and Disclosure, Mary Billings, Han Yan
In recent years, policymakers and investors across the world are increasingly concerned about the impact of climate change risks on the broader economy, in general, and financial markets, in particular. Because financial market efficiency relies on timely and accurate information, many investors argue for better disclosure of firms’ risk exposures to climate change. Yet, many corporations are reluctant to provide this information because the disclosure of non-financial information can be costly. Motivated by the tension between investors and corporations, this project aims to provide systematic evidence on the real economic consequences of climate risk disclosure.