I am very happy that my paper Reevaluating the Carbon Premium: Evidence of Green Outperformance has now been accepted for publication in the International Review of Financial Analysis. I am particularly proud of my student Floor van der Sanden, who did an excellent job and spent months combing through the data. This is Floor’s first publication ever and my first with a student. Thanks a lot for the great cooperation!
The carbon premium refers to the excess returns of brown firms over their green counterparts. Our findings provide evidence supporting a negative carbon premium in the US based on a sample with more than 3,500 publicly listed firms from 2007 to 2023, indicating that green firms tend to outperform brown firms. The key findings carry over to the global sample with more than 10,000 firms across 90 countries. However, we demonstrate that and how this conclusion is contingent upon several critical factors, including the treatment of unscaled emissions, the inclusion of vendor-estimated emissions, temporal considerations regarding emissions and accounting data, and, to some extent, the framework employed, distinguishing between panel regression analysis and portfolio analysis.
