Assessing the influence of climate risk, carbon allowances, and technological factors on the ESG market in the European union

Ugur Pata, Kamel Si Mohammed, Vanessa Serret () and Mustafa Kartal ()
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Ugur Pata: LAU - Lebanese American University, Korea University [Seoul]
Kamel Si Mohammed: CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine, UBBAT - Université Ain Temouchent Belhadj Bouchaib = Ain Temouchent University Belhadj Bouchaib
Vanessa Serret: CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine
Mustafa Kartal: Khazar University, LAU - Lebanese American University, GUST - Gulf University for Science and Technology, Korea University [Seoul]

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Abstract: Environmental, Social, and Governance (ESG) is a market for environmental criteria that has recently attracted the attention of policymakers and in particular European Union (EU) countries to improve environmental quality. In the context of the EU Sustainable Development Goals, this study aims to examine the impact of climate risk uncertainties (transitional (TRI) and physical (PRI)), carbon allowances (EU ETS), and technology index (MSCI) on the ESG market. To this end, the study uses a quantile-on-quantile regression and its multivariate version for the period from November 28, 2007, to January 05, 2023. The results show that TRI and PRI increase ESG market development at higher quantiles, while EU ETS and technological progress reduce ESG progress. This shows that the risk of climate change requires the introduction of stricter environmental standards in EU countries, while the EU ETS and technological progress provide environmental benefits that reduce the need for the ESG market.

Keywords: ESG; market; Climate; risks; Carbon; pricing (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-env
Note: View the original document on HAL open archive server: https://hal.science/hal-05553243v1
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Published in Borsa Istanbul Review, 2024, 24, pp.828 - 837. ⟨10.1016/j.bir.2024.04.013⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05553243

DOI: 10.1016/j.bir.2024.04.013

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