Do Global Financial Markets Capitalise Sustainability? Evidence of a Quick Reversal

28 Pages Posted: 26 Jul 2018 Last revised: 9 Nov 2018

See all articles by Fabio Moliterni

Fabio Moliterni

Fondazione Eni Enrico Mattei (FEEM)

Date Written: July 6, 2018

Abstract

This study investigates the growing importance of sustainability in equity markets by estimating whether company commitment to sustainability matters in corporate valuation. The spreading concern for social and environmental issues, and especially for the material risks of climate change, induces policy to encourage companies to prioritise sustainability in their decision making. There is growing evidence that points to a rationale for a profit-driven response to social and environmental problems, uncovering the role of sustainability in investors’ decisions. Exploring a panel of 3,311 listed companies in 58 countries for the period 2010-2016, this study reveals that sustainability contributes to the creation of market value for listed companies, over the considered period. Furthermore, it investigates how this relationship changes according to environmental policy stringency and sector sensitivity to climate policies.

Keywords: Corporate Sustainability, Sustainable Investing, Climate-change, ESG Disclosures

JEL Classification: O16, Q54, Q56, G32

Suggested Citation

Moliterni, Fabio, Do Global Financial Markets Capitalise Sustainability? Evidence of a Quick Reversal (July 6, 2018). FEEM Working Paper No. 25.2018. Available at SSRN: https://ssrn.com/abstract=3209176 or http://dx.doi.org/10.2139/ssrn.3209176

Fabio Moliterni (Contact Author)

Fondazione Eni Enrico Mattei (FEEM) ( email )

C.so Magenta 63
Milano, 20123
Italy

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