Climate Patents and Financial Markets

Ulrich Hege, Sébastien Pouget and Yifei Zhang

No 23-1400, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study the impact of climate patents on financial markets. Exploiting quasi-random variations in patent examiner leniency, we show that firms are rewarded with significant positive stock returns over a 12-month horizon when they receive fortuitous climate patent grants, compared with similarly innovative but unlucky firms. We ob-serve concomitant trends of reduced costs of capital, shareholder rotations towards environment-focused institutional investors and better environmental ratings. We do not observe similar reactions for other patents, including other green patents. We cor-roborate the distinctive nature of the market reaction to climate innovation by showing that it is amplified during periods of high attention to climate change, for firms with high climate exposure, and for first-time grants of climate patents. Random grants of climate patents do not produce improvements in the innovator’s operating perfor-mance or carbon emissions, but the underlying climate technologies do, suggesting that financial markets react rationally to the signal value of climate patent grants.

Keywords: climate-related patents; green patents; examiner leniency; climate change; implied cost of capital; ESG ratings; responsible investors; CO2 emissions. (search for similar items in EconPapers)
JEL-codes: G11 G23 G24 O34 (search for similar items in EconPapers)
Date: 2023-01, Revised 2024-12
New Economics Papers: this item is included in nep-cfn, nep-ene, nep-env, nep-ipr and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.tse-fr.eu/sites/default/files/TSE/docu ... 2023/wp_tse_1400.pdf Working paper (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:127752

Access Statistics for this paper

More papers in TSE Working Papers from Toulouse School of Economics (TSE) Contact information at EDIRC.
Bibliographic data for series maintained by ().