Investor Rewards to Climate Responsibility: Evidence from the 2016 Climate Policy Shock

Stefano Ramelli, Alexander Wagner, Richard Zeckhauser and Alexandre Ziegler

No 25310, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Donald Trump's election and his nomination of Scott Pruitt, a climate skeptic, to lead the Environmental Protection Agency drastically downshifted expectations on US climate-change policy. We study firms' stock-price reactions and institutional investors' portfolio adjustments after these events. As expected, carbon-intensive firms benefited. Should not companies with responsible strategies on climate change have lost value, since they were paying for actions that were now less urgent? In fact, investors actually rewarded such firms. The premium the firms received resulted, at least in part, from the move into climate-responsible stocks by long-horizon investors presumably expecting a post-Trump rebound to green policy.

JEL-codes: G14 G38 G41 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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