Environmental policies on the systematic risk of critical metals companies

Boris Pastén-Henríquez, Pablo Tapia-Griñen and Jorge Sepúlveda-Velásquez

Finance Research Letters, 2024, vol. 69, issue PA

Abstract: The increase in natural disasters due to climate change has prompted the adoption of measures to mitigate it, like the use of renewable energy sources. This study suggests that the transition risk associated with these policies will rise the demand for critical metals, increasing the systematic risk for companies that produce them. Using Bayesian structural time series, we find evidence suggesting that, following the Paris and Dubai Agreements, the systematic risk for copper and lithium-producing companies increased. At the same time, the changes for cobalt and nickel varied. So, future consideration should be given to hedging these assets.

Keywords: Systematic risk; Climate change; Copper; Lithium; Cobalt; Nickel (search for similar items in EconPapers)
JEL-codes: G11 G15 Q02 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:69:y:2024:i:pa:s1544612324010821

DOI: 10.1016/j.frl.2024.106052

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