Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271890 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10246
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The relative equity pricing of more climate-friendly ("green") versus less climate-friendly ("brown") companies is an open question in climate finance. Previous research comes to conflicting conclusions, documenting either a "carbon premium" with brown stocks yielding higher returns, or the opposite, with green stocks outperforming brown. This paper provides new international evidence on this issue for a range of methodologies. Using carbon dioxide (CO2) emissions as reported by companies to measure their greenness, we document that green stocks across the G7 have generally provided higher returns than brown stocks for much of the past decade. We also try to reconcile our findings with previous work, and we provide some results for early 2022 that show that brown stocks outperformed green ones during the energy crisis.
Subjects: 
climate risk
transition risk
carbon emissions
green stocks
brown stocks
JEL: 
G11
G12
Q54
Document Type: 
Working Paper
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