Determinants of Internal Carbon Pricing
On June 9 2020, the EDHEC Business School joined the Global Research Alliance for Sustainable Finance and Investment (GRASFI), the global network for cutting-edge research on sustainable finance and investment. The partnership underscores EDHEC’s commitment to this area, just a few weeks after presenting its new strategic plan – ‘Impact future generations 2025’ – and unveiling its strong ambitions in the sustainable finance field.
The Alliance fo Sustainable Investing was founded in 2017 to promote multi-disciplinary academic research on sustainable finance and investment. The Alliance is also developing academic collaboration among researchers working on sustainable finance and nurturing the growth and development of graduate students and junior academics working on these topics.
The Paris Climate Change Agreement and the 2030 Agenda aim to set policymakers, the private sector, and civil society on a common path to advance global environmental sustainability and human wellbeing. In this context, actors and institutions in our financial system have a crucial role to play in catalyzing and supporting relevant solutions, and in ensuring that they do not undermine necessary social, environmental, and economic progress. It is also increasingly important that academic research helps to guide global cooperation efforts in an effective direction. This research must come from a diverse range of approaches and fields in order to constructively address what are extremely complicated and multi-disciplinary problems in the sustainability and finance fields.
The 3rd Annual GRASFI Conference is being hosted by the Columbia Center on Sustainable Investment, a joint center of the Columbia Law School and the Earth Institute.
On september 9, Gianfranco Gianfrate, Professor of Finance, EDHEC Business School, and Climate Change & Sustainable Finance Lead Expert, EDHEC-Risk Institute, will present his paper entitled "Determinants of Internal Carbon Pricing", co-written with Nuno Bento Instituto Universitário de Lisboa (ISCTE-IUL) and Joseph Aldy Harvard Kennedy School, Cambridge.
Abstract: While national governments pledged to reduce their greenhouse gas emissions under the Paris Agreement, delivering on these aims will require significant changes in the activities of major sources of emissions such as companies. To drive such changes, companies will need to consider carbon emissions as a cost of production and many companies have begun doing so through internal carbon pricing. By employing data from the Carbon Disclosure Project, authors evaluate how national carbon pricing policies influence firm-level internal carbon pricing and corporate emission targets. They find that firm-level internal carbon prices are significantly higher in countries explicitly pricing carbon through tax and/or cap-and-trade programs. These findings shed light on how companies are factoring climate change in their decision making and on the drivers that can contribute to the generalization of climate pricing in the economy.
Keywords: carbon pricing; carbon tax; cap-and-trade; corporate environmental performance.
You can access his latest research paper Climate Change and Credit Risk.
Professor Gianfrate is a specialist sustainable finance, socially responsible investing, climate change finance, venture capital, private equity, IPO, crowdfunding, crowdlending, corporate valuation, shareholders activism, institutional investors.
Gianfranco Gianfrate is Professor of Finance at EDHEC Business School. He writes and researches on climate change finance. Prior to joining EDHEC Business School, he held teaching and research positions at Erasmus University (Netherlands), Harvard University (USA), and Bocconi University (Italy). Previously, Gianfranco has worked in the financial industry for Deloitte Corporate Finance and Hermes Investment Management. Gianfranco holds a BA and a PhD in Business Administration from Bocconi University and a Master in Public Administration from Harvard University.