Science and the Stock Market: Investors’ Recognition of Unburnable Carbon
By Paul Griffin, A. Jaffe, D. Lont, Rosa Dominguez-Faus. 2014
116 citations recorded by the source corpus.
This paper documents the stock market's reaction to a 2009 paper in the Nature journal of science, which concluded that only a fraction of the world's existing oil, gas, and coal reserves could be emitted if global warming by 2050 were not to exceed 2 °C above pre-industrial levels. This Nature article is now one of the most cited environmental science studies in recent years. Our analysis indicates that this publication prompted an average stock price drop of 1.5% to 2% for our sample of the 63 largest U.S. oil and gas firms. Later, in 2012–2013, the press “discovered” this article, writing hundreds of stories on the grim consequences of unburnable carbon for fossil fuel companies. We show only a small negative reaction to these later stories, mostly in the two weeks following their publication. This limited market response contrasts with the predictions of some analysts and commentators of a substantial decline in the shareholder value of fossil fuel companies from a carbon bubble. Our paper discusses possible reasons for this discrepancy.
Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment
View Paper: https://www.semanticscholar.org/paper/c1ce93ba06d1cc37279d847aa5e9a47fb3277f9b
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In Economics and Econometrics
Citations in the corpus
- Mobilizing private finance for low-carbon innovation – A systematic review of barriers and solutions (2017, unknown): “Consequently, investment managers either divest or assume an active ownership of fossil-fuel based companies to support their low-carbon transition [15,35,118,139].”
- Fossil Fuel Divestment and Portfolio Performance (2018, background): “However, Griffin et al. (2015) do not find a corresponding strong negative impact of the above publications on US oil and gas companies' stock prices. return characteristics of portfolios with and without fossil fuel stocks over an extensive time period.”