Carbon finance and the global equity markets

This paper examines the increasing attention on companies to diminish greenhouse gas emissions, assesses how companies are implementing these reduction policies, and attempts to carry out a cost-benefit analysis of a similar action. The risk factors which investors should evaluate sector by sector are also identified.The main findings of the paper are:a concrete action to reduce greenhouse gas emissions should be immediately taken by the major global companiesthe financial impact of climate change will also affect financial services, transportation, agriculture, tourism, food sectorsconcerning abnormal weather events and Kyoto policy issues, there is strong scepticism about the performance that big corporate companies will havean evaluation of corporate carbon beta implies that future threats to shareholder value vary considerablypricing anomalies are detected in analyses of the carbon factor in the high-risk stocks in GHG-intensive industriesfinancial institutions think that they won’t be affected by climate change considering that the financial risks of climate change will increase, managing them does not necessarily impose a net costThe report underlines the importance for investors to take account of climate change and carbon finance issues in their asset allocation and equity valuations in order to lessen major risks that will have negative investment consequences over the course of time.Please note: The original version of this paper is not available onthe publishers website. Therefore this abstract links to a version hosted by the Global Environment and Technology Foundation.