Investors pay a premium for green equities

Analysis - January 2022 - No. 1

Authors Hensch, Jonas Ladegaard; Kristiansen, Kristian Loft; Vaporakis, Peter Nikolaos Halling
Subject Financial markets
Type Analysis
Year 2022
Published 27 January 2022
Abstract icon This analysis examines whether investors are willing to pay a higher price for a company with low CO2e emissions relative to a corresponding company with higher emissions. The analysis finds, other things being equal, that companies with lower emissions have a higher equity price. The reason for the higher price is found to be that their future earnings are connected with lower risks than comparable companies with higher emissions e.g. due to the prospect of a future carbon tax.