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Climate change policies: Good news or bad news for firms in the European Union?
Author(s) -
Birindelli Giuliana,
Chiappini Helen
Publication year - 2020
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.2093
Subject(s) - european union , equity (law) , shareholder , climate change , business , event study , value (mathematics) , environmental policy , panel data , climate policy , economics , economic policy , finance , corporate governance , natural resource economics , political science , ecology , context (archaeology) , machine learning , biology , computer science , law , econometrics , paleontology
Abstract This paper investigates whether the European Union policies to tackle climate change create or destroy value for shareholders over the years 2013–2018. Using the event study method, our results suggest that all the sectors were affected by at least one climate policy announcement and that negative effects were more common than positive effects, especially when the Paris Agreement came into force. Up until that point, the announcement of a new policy produced significant positive effects only on the most environmentally committed firms. Finally, data panel regressions reveal that the company's sector, more than its environmental commitment, played a central role in determining market reactions toward climate policies. Our paper contributes to the still limited debate on the relationship between environmental regulation and value for equity investors and opens up the debate on a topic yet to be explored: the mitigating role of the company's environmental commitment. Relevant implications for policy makers promoting a European sustainable economy are also discussed.