Can Environmental Sustainability Be Used to Manage Energy Price Risk?

37 Pages Posted: 28 Feb 2010

See all articles by Irene Henriques

Irene Henriques

York University - Schulich School of Business

Perry Sadorsky

York University - Schulich School of Business

Date Written: January 11, 2010

Abstract

Energy security issues and climate change are two of the most pressing problems facing society and both of these problems are likely to increase energy price variability in the coming years. This paper develops and estimates a model of a company’s energy price exposure and presents evidence showing that increases in a company’s environmental sustainability lowers its energy price exposure. This result is robust across two different measures of energy prices. These results should be useful to companies seeking new ways of addressing energy price risk as well as governments concerned about the impact that energy price risk can have on economic growth and prosperity.

Keywords: Environmental Sustainability, Energy Price Risk, Stock Prices, Oil Prices

JEL Classification: Q40

Suggested Citation

Henriques, Irene and Sadorsky, Perry, Can Environmental Sustainability Be Used to Manage Energy Price Risk? (January 11, 2010). Energy Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1560682

Irene Henriques

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Perry Sadorsky (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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