Carbon Risk

Carbon Risk ArXiv ID: ssrn-2930897 “View on arXiv” Authors: Unknown Abstract We investigate carbon risk in global equity prices. We develop a measure of carbon risk using industry standard databases and study return differences between b Keywords: carbon risk, climate finance, ESG investing, portfolio pricing, equities Complexity vs Empirical Score Math Complexity: 4.0/10 Empirical Rigor: 6.5/10 Quadrant: Street Traders Why: The paper uses standard asset pricing regressions and portfolio sorts but lacks heavy mathematical derivations; however, it demonstrates strong empirical rigor through the use of multiple industry-standard ESG databases, a constructed factor-mimicking portfolio (BMG), and extensive backtesting across regions and time periods. flowchart TD A["Research Goal How does carbon risk affect global equity returns?"] --> B["Data Collection Refinitiv ESG, CRSP, Compustat"] B --> C["Methodology Portfolio Formation & Regression Analysis"] C --> D["Computation Carbon Risk Score & Alpha Calculation"] D --> E["Key Finding 1 High-carbon firms earn significant positive returns"] D --> F["Key Finding 2 Carbon risk is priced in global markets"]