Arcticle’s by Jan Bouwens

The year 2025 will likely be remembered as the moment where politics and academia became deeply divided. Universities are increasingly under scrutiny for allegedly advancing partisan research agendas. To safeguard their credibility and autonomy as well as to protect their academics, universities should strive to minimize their exposure to politically charged research priorities. Individual researchers, too, benefit from steering clear of such topics—but they cannot achieve this independence alone. The danger of political bias arises when researchers feel pressurized to pursue topics or draw conclusions aligned with the ideological preferences of university leadership—whether left- or right-leaning. This pressure can intensify…

It appears to be extremely hard to produce  a meaningful ESG score. Standard and Poor’s recently decided that it will no longer rank companies’ environmental, social and governance risks from 1 to 5 . This decision can be understood in the light of how aggregate ESG scores are constructed as  discussed in a recent FT publication: “Companies with good ESG scores pollute as much as low-rated rivals.” This article made it clear that the current ESG metrics system has a major flaw which entails that it de facto allows firms to hide bad performance in one metric as it will…

Red flags in research as a means to overcome group think   How independent tests can help to overcome group think so as to enhance fraud detection. In his classic experiment in 1955, Solomon Asch showed that as soon as one person paints an incorrect picture, this picture is confirmed by a non-trivial number of others. In his research Asch shows four lines: the test line and lines 1, 2 and 3. Participants in his research must indicate which of the lines 1, 2 or 3 is of the same length as the test line. Of the individual participants, 99%…

The proposed ESG reporting standards presented by the EU last week are overwhelming. I advocate to limit reporting requirements to two metrics: profit and emission reductions. Last week, EFRAG published the first version of the European Sustainability Reporting Standards. The set of standards describes in detail the topics that companies report on and also obliges them to develop targets that define the company’s ambition. The ESG metrics are presented in 15 appendices spanning many hundreds of pages. About fifty metrics focus on every company in general and dozens of other metrics are industry-specific. The metrics are intended to ensure that…

Jan Bouwens (Professor of Accounting University of Amsterdam & Research fellow University of Cambridge) Auditors issue a going concern opinion that typically does not extend beyond one year in advance. The idea of that opinion is to draw attention to pressing issues the management of the firm has to deal with and stakeholders have to bear in mind when dealing with the firm. An important question is whether the existing going concern statement is sufficient since companies must set climate objectives which effects by definition surface far out in the future but at the same time pertains to the very…