Can Environmental Sustainability Be Used to Manage Energy Price Risk?
37 Pages Posted: 28 Feb 2010
Date Written: January 11, 2010
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: Suggested Citation