Stock price reactions to the climate activism by Fridays for Future: The roles of public attention and environmental performance

This research investigates how the European and U.S. stock markets reacted to the upheaval caused by Fridays for Future. We perform an event study on stocks listed in the Stoxx Europe 600 and S & P 500 to examine their price reactions to the Global Climate Strikes 1-11. We analyze the significance of abnormal stock returns utilizing three event windows covering anticipation, short-term, and lagged effects. We also divide the sample by environmental performance grades. Our findings reveal that climate activism significantly affected stock valuation for all 11 Global Climate Strikes. Superior environmental performance is comparatively beneficial for firm values when climate activism receives a high level of public attention. We identify differences in the market reactions between Europe and the U.S. Also, we enrich the literature on stock market reactions by demonstrating that investors react, not only to primary stakeholder events (i.e., enactment of regulations by governments) but also to secondary stakeholder pressure (i.e., NGO activism). Furthermore, we provide evidence that climate activism has a processual character that causes recurring effects on the stock market. Our study encourages policymakers to increase environmental pressure as a mechanism for guiding green transformation.

Automated summary

This research examines the impact of the Fridays for Future movement on the European and U.S. stock markets. Through an event study on stocks listed in the Stoxx Europe 600 and S&P 500, the study analyzes the price reactions during the Global Climate Strikes 1-11. The findings reveal that climate activism significantly influenced stock valuation and that superior environmental performance is beneficial when climate activism receives high public attention. The study also highlights the differences in market reactions between Europe and the U.S. and contributes to the literature by showing that investors react not only to primary stakeholder events but also to secondary stakeholder pressure.