Scientific Beta

Benefits and Pensions Monitor:"The EDHEC-Scientific Beta research chair publication argues that studies which look at the financial market implications of firms’ carbon emissions do not shed enough light on the issue to draw any conclusions. ‘The DeCarbonisation Factor: A New Academic Fiction?’ says the papers, ‘Decarbonization Factors’ by Cheema-Fox et al. (2019) and ‘Do Investors Care About Carbon Risk’ by Bolton and Kacperczyk (2019), contradict each other."

Benefits and Pensions Monitor 24/01/2020

"(...) The EDHEC-Scientific Beta research chair publication argues that studies which look at the financial market implications of firms’ carbon emissions do not shed enough light on the issue to draw any conclusions. ‘The DeCarbonisation Factor: A New Academic Fiction?’ says the papers, ‘Decarbonization Factors’ by Cheema-Fox et al. (2019) and ‘Do Investors Care About Carbon Risk’ by Bolton and Kacperczyk (2019), contradict each other. The article by Cheema-Fox et al. (2019) maintains that low carbon emission firms outperform high carbon emission ones. Bolton and Kacperczyk (2019), however, conclude that high carbon emissions have a positive impact on returns. Professor Noël Amenc, CEO of Scientific Beta, says, “The fact that there is no carbon factor should lead us to conclude that while there is no positive risk premium to being low carbon, there is no negative risk premium either. In the current state of scientific knowledge, it is therefore possible, on the basis of traditional, consensus-based, rewarded factors, to construct portfolios while excluding the bad apples of the climate class and ultimately to achieve highly decarbonized portfolios with very good risk-adjusted performance. This approach, which does not make carbon a factor in performance, means that providers and investors should stop overselling green performance to their stakeholders.” (...)"