Titelaufnahme

We propose measuring firms' exposure to climate risk via the market. We build a theoretical foundation and construct empirical market-based greenness measures based on abnormal stock returns around UN climate conferences. Our measures cover around 36,000 international firms, tenfold the existing measures. Market-based greenness is associated with lower present and future carbon emissions, and provides explanatory power distinct from existing climate risk measures. Market-based green firms are more likely to file green patents, have lower stock price volatility, and are financially more robust. At the country level, market-based greenness correlates with lower emission intensity and larger shares of renewable energy.