Do Investors Care about Climate-related Innovations?

Abstract

In this paper, we use a new method to identify U.S. patents associated with Climate Change Mitigation Technologies (CCMT) and examine investors’ perspectives on climate-related innovations. Our findings indicate that as societal sentiment and corporate carbon risk intensify, investors increasingly value these innovations. Moreover, such innovations help shield firms with high carbon risks from underperforming returns. We also find that advancements in CCMT correlate with lower increases in firm carbon emissions and reduced exposure to climate risk factors. Finally, our study highlights the critical influence of government policies in encouraging climate-related innovations.

Presenters

Bing Liang
Charles P. McQuaid Professor of Finance, Finance, UMass, Massachusetts, United States

Details

Presentation Type

Paper Presentation in a Themed Session

Theme

2025 Special Focus—Sustainable Development for a Dynamic Planet: Lessons, Priorities, and Solutions

KEYWORDS

Climate change; Climate change mitigation technologies, Patents; Asset pricing, Risk