Students: Victor Weisberg

Independent Project

Advisor: Matthew Kahn

Most profit-driven managers would like to believe that it is not their responsibility to be environmentally conscious. Yet several researches have documented that on several occasions, environmentally intelligent choices by management have helped firms secure market confidence in times of regulatory uncertainty. These ‘it pays to be green’ scenarios, though infrequent, require management to address public and scientific concern prior to it becoming a material issue. This forward-thinking judgment and initial action should be seen as an investment for the long-term well-being of the company rather than an untimely deadweight costs. Climate change and climate risks are an intimate threat to both the world and financial markets, and very shortly these risks will materialize to investors and in turn, management decisions around climate change will be tested. Using CDP data of firm’s carbon reporting, I tested the effect of the Copenhagen Conference on stock price. This research discovers that non-disclosing firms were significantly less favored than reporting firms during the period that China and India signed on to the accord.