Carbon Risk

Abstract

The costs of addressing climate change will be borne by firms through their investments, supply-chains, and products and services. Financial markets play a role in aggregating firm-level information on the costs of the transition but also on pricing these risks. We construct a carbon risk factor for 1,600 global firms with carbon risk data from four major ESG databases. This factor can be used as a straightforward measure of carbon beta absent firm-specific carbon emissions information. We compute the carbon beta of 39,000 global firms. Our factor can be used by firms, regulators and investors to better understand carbon risk.

Date
Jan 5, 2019 10:15 AM
Location
Atlanta, Georgia
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Ryan Riordan
Associate Professor & Distinguished Professor of Finance Director of Research, Institute for Sustainable Finance

I study the use of technology in financial markets, and more recently the role climate risks play in asset prices. At the Smith School of Business, I am an Associate Professor and Distinguished Professor of Finance, as well as the Director of Research of the Institute for Sustainable Finance.