At Wangari, we’ve spent years uncovering hidden threads between sustainability and finance—groundwater and profits, leadership diversity and returns. Carbon? We’ve mostly avoided it.
Not because it’s unimportant—carbon dominates sustainability conversations—but because it felt too obvious. Banks stress-test carbon risk, MSCI sells carbon-adjusted ratings, and every ESG fund highlights low-carbon credentials. What more could we add?
But here’s the surprise: for all this noise, nobody has proven a causal link between carbon emissions and stock prices.
Research Still Comes Up Empty
Bolton & Kacperczyk (2021): Found a “carbon premium,” where high emitters earned higher stock returns.
Aswani et al. (2024): Fixed data flaws, found no relationship between emissions (Scope 1–3) and stock returns.
Rabobank (2008–2019): Expected carbon-inefficient firms to be penalized—found nothing.
Science-Based Targets (2024 study): Companies pledging CO₂ cuts saw no significant stock boost.
Even as banks model carbon risk and investors hedge it, cause-and-effect remains unproven.
Why This Matters
Without causal proof:
Investors may over-hedge, avoiding carbon-heavy stocks unnecessarily.
Companies lack a financial incentive to decarbonize voluntarily.
Policymakers relying on markets to drive change may be chasing a mirage.
Our Next Step
We think it’s time to change this. On Friday, we’ll publish a first-of-its-kind causal analysis:
ArcelorMittal’s emissions and stock price, over a decade of data.
Modern causal inference techniques to separate correlation from causation.
A result that could finally clarify whether cutting carbon truly boosts market value.
Carbon may be everywhere, but the answers are not. Let’s change that.
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