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The environmental and financial performance of European green energy investments

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Resumo:This paper addresses the relationship between environmental and financial performance of energy companies. For this purpose, we compare the performance of green energy portfolios of European stocks compared to their non-green counterparts from 2009 to 2018. Furthermore, we form portfolios based on the dimensions of the Environmental ASSET4 ESG pillar, namely the Environmental Pillar, Emission Reduction, Resource Reduction and Product Innovation dimensions and compare the performance of high-rated portfolios against low-rated portfolios. Our results show that, for the most part, green energy portfolios are very similar to non-green portfolios in terms of performance, with most of our results not showing any statistical difference between green and non-green portfolios. However, when analyzing performance across different sub-periods, namely from 2009 to 2013 and 2014 to 2018, we observe an improvement in abnormal returns. These results suggest that, over time, the performance of green stocks improved but these improvements are not enough to outperform that of non-green portfolios. Regarding the ranked-based portfolios, the results show that, overall, high-rated and low-rated portfolios perform similarly but, when considering a 50% cut-off and when using a sector benchmark (the MSCI Energy EU), as well as in the 2014 to 2018 sub-period, the high-rated portfolio formed on the Resource Reduction dimension significantly outperforms the low-rated portfolio. Overall, our results suggest that investors will not suffer financial penalties by forming portfolios based on green energy screening.
Autores principais:Andrade, Nuno Miguel Santos
Assunto:Environmental performance Green energy Green finance Sustainable investments ESG investing Ciências Sociais::Economia e Gestão
Ano:2020
País:Portugal
Tipo de documento:dissertação de mestrado
Tipo de acesso:acesso aberto
Instituição associada:Universidade do Minho
Idioma:inglês
Origem:RepositóriUM - Universidade do Minho

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