Gino Cenedese, Shangqi Han, and Marcin Kacperczykare are working on a project sponsored by Inquire Europe. The project is scheduled to be finalized by August 2024.
The growing concerns about climate change motivate the need for a transition away from fossil fuels to renewable energy. The resulting uncertainty about the process generates risk for companies and investors in the economy. Such transition risk embodies a wide range of shocks, including changes in climate policy, reputational impacts, shifts in market preferences and norms, and technological innovation. The measurement and scale of transition risk are some of the key questions in climate finance. In this paper, we propose a novel framework for measuring transition risk that combines the scientific social objective to decarbonize the economy with the forward-looking elements of risk and examine whether such measures are priced in the cross-section of global stocks.
Read more in the extended summary on our website.