How do Climate Change and the Stock Market Relate to Each Other

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When you do the math and look at how much money we’d need in order to save the climate, the answer is $53 trillion.

How could this kind of money be obtained in such a short amount of time? Well, one could try to tax pollution or ask for government funds but the fastest answer would be to try and get big companies to invest into anything that is not pollution related.

What is the problem?

Well, a doctoral student, Soh Young In, at the Global Projects Center at Stanford believes that companies are afraid to invest in these types of endeavors because they think that they are not profitable.

This problem is a very old one, with financial researchers having tried a lot of things in order to integrate to notion of ESG (environment, social, and governance) into investment planning.  Generally speaking, the “G” and the “S” part of that acronym have not faced any forms of backlash and it has been seen that companies that do good in these areas attract major investors. However, the environmental part is still a touchy subject that has not been dealt with as it requires a great number of data.

What people think

The majority of people that have analyzed the ESG concept admit that it can influence a lot the way in which a company works, starting from its raw material supply and going as far as the number of supply chains that are available. When investors are looking at the possible prospects of a company they now have the option of using data pools in order to find out what they are looking for. One of those data piles is Bloomberg, who now has ESG data as well in the company’s portfolio, apart from what is usually written there.

Trucost carbon emission data

Going back to Soh Young In and her team’s work, their paper is meant to be the start of a new type of discussion in this area. Their work allows access to Trucost, a database in charge of tracking carbon emissions for every company. The team came up with a metric system that they have named carbon efficiency. This is meant to be an investment strategy in which one is able to cut ties with the carbon-inefficient firms and then invests more into those that are carbon-efficient, therefore helping them improve.

The team is not just happy with what they have done so far, they want to see more progress being made, with the addition of many other variables and analyses. This is a time-consuming plan but in the end it will provide investors with a very detailed outlook into what each company does to the climate, where their strengths are and where are their weaknesses when it comes to being eco-friendly.

What do investors think about this project

From what we have found out so far, it looks like investors are more than happy with this new type of academic research.  They are not at all against green investing, if one could have thought of that from what we have said at the beginning of the article.

It also looks like companies have started to invest in a low-carbon index fund. They are doing this not only to help clean the environment of toxic carbon emissions, but, some fans of conspiracy theories may add, that they are starting to do this because they do not want to lose the support of their investors.

Nevertheless, Soh Young In’s project is certainly a step in the right direction and this open academic research could be the start of a new system that would help on a larger scale.

Karen and her husband live on a plot of land in British Columbia. They aim to grow and raise a significant part of their food by maintaining a vegetable garden, keeping a flock of backyard chickens and foraging. They are also currently planning a move to a small cabin they hand built. Karen’s academic background in nutrition made her care deeply about real food and seek ways to obtain it. Thus sprung Anna’s interest in backyard gardening, chicken and goat keeping, recycling and self-sufficiency.


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