DP16061 Limits to Private Climate Change Mitigation

Author(s):	Dalya Elmalt, Deniz Igan, Divya Kirti
Publication Date:	April 2021
Date Revised:	November 2021
Keyword(s):	Climate change mitigation, ESG, Major upstream emitters, sustainable investing
JEL(s):	G30, Q54
Programme Areas:	Financial Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=16061

In the absence of sufficient support for carbon taxes, a more sustainable approach to finance-one that incorporates environmental, social, and governance (ESG) considerations-could be part of the way forward to address climate change. However, our analysis suggests that ESG scores tend to reflect what firms say they (will) do, not what they actually do, to contain their carbon footprints and do not capture differences across firms in their contributions to climate change. Continued efforts to build consensus for effective economy-wide policies targeting carbon emissions remain crucial.