Market Effects of Voluntary Climate Action by Firms: Evidence from the Chicago Climate Exchange

Gans, Will and Hintermann, Beat. (2013) Market Effects of Voluntary Climate Action by Firms: Evidence from the Chicago Climate Exchange. Environmental and Resource Economics, 55 (2). pp. 291-308.

PDF - Accepted Version

Official URL: http://edoc.unibas.ch/48537/

Downloads: Statistics Overview


Why do for-profit firms take voluntary steps to improve the environment? Do green actions indicate that managers are wasting resources in costly programs to produce benefit that cannot be captured by the firm? Or is voluntary environmental spending profitable for a business sense?  Empirical evidence is decidedly mixed.  In this study, we use 19 years of monthly stock price returns to examine the profitability of participation in the world’s largest voluntary greenhouse gas mitigation program: the Chicago Climate Exchange (CCX).  After controlling for systemic market risk as well as industry-specific shocks, we find statistically significantly positive excess returns for firms that announce their decision to join CCX.  In addition, the progress of proposed greenhouse gas legislation (the Waxman-Markey bill) had a positive and large impact on excess returns for CCX member firms, suggesting that a major incentive for firms to join CCX may be to prepare for future regulation.  Marginal abatement costs (proxied by the carbon price), on the other hand, were unrelated to excess returns.  Our results imply that voluntary approaches should play a role in combating climate change, but that relying on them alone is not enough.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Public Economics / Public Finance (Hintermann)
UniBasel Contributors:Hintermann, Beat
Item Type:Article, refereed
Article Subtype:Research Article
Note:Publication type according to Uni Basel Research Database: Journal article
Identification Number:
edoc DOI:
Last Modified:06 Apr 2018 10:50
Deposited On:16 Mar 2017 10:40

Repository Staff Only: item control page