Die nächsten Veranstaltungen
Laurent Millischer (Joint Vienna Institute)
The Carrot and the Stock: In Search of Stock-Market Incentives for Decarbonisation
Comment: Thomas Url – This lecture will take place at WIFO. However, you can also participate via MS Teams, see link above.
Veranstalter: Österreichisches Institut für Wirtschaftsforschung
Online seit: 13.01.2022 0:00
Financial markets can support the transition to a low-carbon economy by redirecting funds from highly emissive to clean investments.
We study whether European stock markets incorporate carbon prices in company valuations and to what degree they discriminate
between firms with different carbon intensities. Using a novel dataset of stock prices and carbon intensities of 338 European
publicly traded companies between 2013 and 2021, we find a strongly statistically significant relationship between weekly
carbon price changes and stock returns. Crucially, this relationship depends on firms' carbon intensity: the higher the carbon
costs a firm faces, the poorer its stock performance during the periods of carbon price increases. Emissions that firms cover
with free allowances however do not impact this relationship, illustrating how both carbon pricing and disclosures are needed
for financial markets to foster climate change mitigation. The relationship we identify can provide an incentive for firms
to decarbonise. We argue in favour of more ambitious carbon pricing policies, as this would strengthen the stock-market incentive
channel while causing only limited financial stability risk for stocks.