Discussion paper

DP14567 Carbon Premium around the World

This paper explores how the carbon premium varies around the world. We estimate the stock return premium associated with carbon emissions at the firm level in a cross-section of over 14,400 firms in 77 countries. We find that there is a widespread carbon premium—higher stock returns for companies with higher carbon emissions—in all sectors over three continents, Asia, Europe, and North America. Stock returns are affected by both direct and indirect emissions through the supply chain. In addition, the carbon premium has been rising in recent years. We also find widespread divestment based on carbon emissions by institutional investors around the world, but institutional investors tend to focus their divestment on foreign companies.


Bolton, P and M Kacperczyk (2020), ‘DP14567 Carbon Premium around the World‘, CEPR Discussion Paper No. 14567. CEPR Press, Paris & London. https://cepr.org/publications/dp14567