Climate Change and Credit Risk
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.
About EDHEC
Operating from campuses in Lille, Nice, Paris, London and Singapore, EDHEC is one of the world’s top 15 business schools. Fully international and directly connected to the business world, EDHEC commands a strong reputation for research excellence and the ability to train entrepreneurs and managers capable of breaking new ground. EDHEC functions as a genuine laboratory of ideas and produces innovative solutions valued by businesses. The School’s teaching is inspired by its research work and a focus on “learning by doing”, all with the aim of equipping people with the skills to succeed in business.
