The environmental and financial performance of green energy investments: European evidence

26 Pages Posted: 22 Jul 2021

See all articles by Nuno Miguel Andrade

Nuno Miguel Andrade

University of Minho - School of Economics and Management

Maria C. Cortez

University of Minho - School of Economics and Management

Florinda Silva

University of Minho - School of Economics and Management

Date Written: July 19, 2021

Abstract

This paper investigates the environmental and financial performance of investments in energy firms. For this purpose, we analyze portfolios of green energy European stocks compared to their non-green counterparts from January 2008 to November 2020. Within firms with environmental ratings, those that are green perform better in environmental terms than their non-green counterparts, although the difference has narrowed in recent years. Regarding financial performance, our results show that, in general, the green energy portfolio outperforms the market but compared to the non-green portfolio, the difference is only statistically significant when an energy stock index is used as the market factor. Furthermore, we find that the outperformance of the green portfolio is mainly due to a performance improvement in most recent years. Overall, our results show that over this period investments in green energy firms perform at least as well as their non-green energy counterparts.

Keywords: Environmental performance, Financial performance, Green energy, Green finance, Sustainable investments.

JEL Classification: G11, M14.

Suggested Citation

Andrade, Nuno Miguel and Ceu Cortez, Maria and Silva, Florinda, The environmental and financial performance of green energy investments: European evidence (July 19, 2021). Available at SSRN: https://ssrn.com/abstract=3889683 or http://dx.doi.org/10.2139/ssrn.3889683

Nuno Miguel Andrade

University of Minho - School of Economics and Management ( email )

Campus Gualtar
Braga, 4710-057
Portugal

Maria Ceu Cortez (Contact Author)

University of Minho - School of Economics and Management ( email )

Campus Gualtar
Braga, 4710-057
Portugal

Florinda Silva

University of Minho - School of Economics and Management ( email )

Campus Gualtar
Braga, 4710-057
Portugal
351 253 604564 (Phone)
351 253 601380 (Fax)

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