Emission Reduction Initiatives: A Path to Abnormal Returns?

Abstract

This thesis investigates whether firms who invest in emission reduction initiatives yield higher returns than those who abstain from them by drawing upon datasets which cover the period 2010-2022, for 2.174 companies. We find statistically significant evidence that emission reduction initiatives have a negative impact on a firm's abnormal returns in 2021-2022, and no statistically significant impact in the years before. Furthermore, we investigate the impact of major policy shocks on the carbon premium and emission reduction initiatives, and find no significant impact of policy shocks on the level of emission reduction investments and no strong correlation between emission intensity and such investments.