Technological greenness and long-run performance

Stefano Battiston, Irene Monasterolo and Maurizio Montone

No 19337, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Firms’ investments in green technology are crucial for investors’ alignment to the Net Zero target. However, it is still unclear whether these investments are rewarded by the market, particularly in the long run. Using a science-based technological measure of greenness, we find that adopting sustainable technologies leads to a long-run improvement in fundamentals that is only partially reflected in stock prices. Correspondingly, firms with greener technologies achieve higher returns over a multi-year period and are better positioned for the transition to a low-carbon economy. These effects are especially pronounced in financially developed countries and among firms with better climate-related disclosure.

JEL-codes: G10 G12 G14 G15 (search for similar items in EconPapers)
Date: 2024-08
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