Journal ArticleDOI
Do Investors Care About Carbon Risk
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TLDR
The authors found that stocks of firms with higher total CO2 emissions (and changes in emissions) earn higher returns, controlling for size, book-to-market, and other return predictors.Abstract:
We study whether carbon emissions affect the cross-section of US stock returns We find that stocks of firms with higher total CO2 emissions (and changes in emissions) earn higher returns, controlling for size, book-to-market, and other return predictors We cannot explain this carbon premium through differences in unexpected profitability or other known risk factors We also find that institutional investors implement exclusionary screening based on direct emission intensity (the ratio of total emissions to sales) in a few salient industries Overall, our results are consistent with an interpretation that investors are already demanding compensation for their exposure to carbon emission riskread more
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Journal ArticleDOI
The Importance of Climate Risks for Institutional Investors
TL;DR: According to a survey about climate risk perceptions, institutional investors believe climate risks have financial implications for their portfolio firms and that these risks, particularly regulatory risks, already have begun to materialize.
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Firms and social responsibility: A review of ESG and CSR research in corporate finance
TL;DR: The authors reviewed the financial economics-based research on Environmental, Social, Social and Governance (ESG) and Corporate Social Responsibility (CSR) with an emphasis on corporate finance.
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Sustainable investing in equilibrium
TL;DR: In this article, the authors model investing that considers environmental, social, and governance (ESG) criteria and find that green assets have low expected returns because investors enjoy holding them and because green assets hedge climate risk.
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Responsible Investing: The ESG-efficient Frontier
TL;DR: This article proposed a theory in which each stock's environmental, social, and governance (ESG) score plays two roles: (1) providing information about firm fundamentals and (2) affecting investor preferences.
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Carbon Tail Risk
TL;DR: In this article, the authors show that climate policy uncertainty makes it difficult for investors to quantify the impact of future climate regulation, and they show that such uncertainty is priced in the option market and that the cost of option protection against downside tail risks is larger for firms with more carbon-intense business models.