FEEM working papers "Note di lavoro" series
2018 .025

Do Global Financial Markets Capitalise Sustainability? Evidence of a Quick Reversal


Authors: Fabio Moliterni
Series: Society and Sustainability
Editor: Stefano Pareglio
Keywords: Corporate Sustainability, Sustainable Investing, Climate-change, ESG Disclosures
JEL n.: O16, Q54, Q56, G32

Abstract

This study investigates the growing importance of sustainability in equity markets by estimating whether company commitment to sustainability matters in corporate valuation. The spreading concern for social and environmental issues, and especially for the material risks of climate change, induces policy to encourage companies to prioritise sustainability in their decision making. There is growing evidence that points to a rationale for a profit-driven response to social and environmental problems, uncovering the role of sustainability in investors’ decisions. Exploring a panel of 3,311 listed companies in 58 countries for the period 2010-2016, this study reveals that sustainability contributes to the creation of market value for listed companies, over the considered period. Furthermore, it investigates how this relationship changes according to environmental policy stringency and sector sensitivity to climate policies.

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Suggested citation: Moliterni, F. (2018), 'Do Global Financial Markets Capitalise Sustainability? Evidence of a Quick Reversal', Nota di Lavoro 25.2018, Milano, Italy: Fondazione Eni Enrico Mattei

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