April 28, 2011

Market value of companies decreased by CO2 emissions

In a study of S&P500 corporations conducted by the business schools of Notre Dame, Univ of Wisconsin and Georgetown University, researchers found that "for every additional thousand metric tons of carbon emissions for our sample of S&P 500 firms, firm value decreases by $202,000."

"The economic effect of carbon emissions on firm value is large, particularly since the direct costs of carbon emissions have been less than $40 per metric ton in the recent past."
Researchers from the University of Wisconsin-Madison, Georgetown University and the University of Notre Dame believe the report is the first to provide evidence of the price that U.S. capital markets are assigning to emissions.
"The results have significant implications, as federal regulation requiring companies to pay for their carbon emissions continues to be debated," said Sandra Vera-Muñoz, one of the authors and a professor at the University of Notre Dame, in a statement. "Although regulation has yet to be adopted, our results suggest that the markets are already anticipating the effects of the costs of emissions on firm value."
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