On 9 september 2021, Gianfranco Gianfrate, Professor of Finance, EDHEC Business School, and Climate Change & Sustainable Finance Lead Expert, EDHEC-Risk Institute presented his paper entitled "Determinants of Internal Carbon Pricing", co-written with Nuno Bento Instituto Universitário de Lisboa (ISCTE-IUL) and Joseph Aldy Harvard Kennedy School, Cambridge.
Abstract: While national governments pledged to reduce their greenhouse gas emissions under the Paris Agreement, delivering on these aims will require significant changes in the activities of major sources of emissions such as companies. To drive such changes, companies will need to consider carbon emissions as a cost of production and many companies have begun doing so through internal carbon pricing. By employing data from the Carbon Disclosure Project, authors evaluate how national carbon pricing policies influence firm-level internal carbon pricing and corporate emission targets. They find that firm-level internal carbon prices are significantly higher in countries explicitly pricing carbon through tax and/or cap-and-trade programs. These findings shed light on how companies are factoring climate change in their decision making and on the drivers that can contribute to the generalization of climate pricing in the economy.