Stock Price Rewards to Climate Saints and Sinners: Evidence from the Trump Election
62 Pages Posted: 27 Sep 2018 Last revised: 20 Mar 2019
Date Written: March 11, 2019
Donald Trump's 2016 election and the subsequent nomination of Scott Pruitt, a climate skeptic, to lead the Environmental Protection Agency drastically downshifted expectations on US climate change policy. We study firms' stock-price reactions and institutional investors' portfolio adjustments after these events. As widely reported, firms in industries with high carbon intensity benefited, at least briefly. It might be expected that companies with ``responsible'' strategies on climate change would also have lost value, since they were paying for actions that seemed less urgent. In fact, investors actually rewarded such firms. Long-horizon investors moved into climate-responsible stocks.
Keywords: Climate change, CSR, election surprise, ESG, event study, stock returns
JEL Classification: G14, G38, G41
Suggested Citation: Suggested Citation