Climate Patents and Financial Markets

95 Pages Posted: 28 Jul 2022 Last revised: 13 Feb 2024

See all articles by Ulrich Hege

Ulrich Hege

Toulouse School of Economics; European Corporate Governance Institute (ECGI)

Sebastien Pouget

Toulouse School of Economics

Yifei Zhang

Peking University, HSBC Business School

Date Written: February 6, 2024


We study the financial markets reaction to climate patents announcements. Exploiting quasi-random variations in patent examiner leniency to allow for causal interpretations, we find that firms with fortuitous climate patent grants benefit from positive medium-run abnormal stock returns and a lower cost of capital compared to similarly innovative but unlucky firms. These effects are amplified during periods of high attention to climate change, for firms with high climate exposure, and for first-time grants of climate patents. Random grants of climate patents also lead to an inflow of responsible institutional investors and to better environmental ratings. They do not produce improvements in the innovator's operating performance or carbon emissions, but the underlying climate technologies do, suggesting that financial markets react to the signal value of climate patent grants.

Keywords: climate patents, examiner leniency, climate change, implied cost of capital, ESG ratings, responsible investors, CO2 emissions

JEL Classification: G11, G23, G24, O34

Suggested Citation

Hege, Ulrich and Pouget, Sebastien and Zhang, Yifei, Climate Patents and Financial Markets (February 6, 2024). European Corporate Governance Institute – Finance Working Paper No. 961/2024, Available at SSRN: or

Ulrich Hege (Contact Author)

Toulouse School of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
+33 5 61 12 86 01 (Phone)

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European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
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1000 Brussels

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Sebastien Pouget

Toulouse School of Economics ( email )

21 allée de Brienne
31015 Toulouse Cedex 6

Yifei Zhang

Peking University, HSBC Business School ( email )

University Town, Nanshan District


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