Sustainable Blueprint: Do Stock Investors Increase Emissions?

The lack of agreement on climate policies among stock-market investors has raised significant concerns about GHG-emission levels, likely reflected in asset pricing. This study uses annual data sourced from the World Bank from 1980 to 2019 to examine whether stock-market investments increase GHG emissions in Organization for Economic Co-operation and Development (OECD) countries. The study employs the panel-standard fixed effects and the Arellano-Bover and Blundell-Bond dynamic methods and shows that stock-investor confidence is critical for emissions reduction in OECD countries. Additionally, the results highlight the potential mechanism through which the stock market can influence emissions in the OECD countries. We recommend that investors re-evaluate the emissions criteria before selecting long stock portfolios. Additionally, there is a need for policymakers to promote the preservation of environmental quality by carefully redesigning policies for stock-market investments.

Automated summary

The lack of agreement on climate policies among stock-market investors raises concerns about GHG emissions. This study examines the impact of stock-market investments on GHG emissions in OECD countries using annual data from 1980 to 2019. The results highlight the importance of stock-investor confidence in emissions reduction and identify potential mechanisms through which the stock market can influence emissions. The study recommends investors to re-evaluate emissions criteria and policymakers to redesign stock-market policies to promote environmental preservation.