Abstract
The first Global Climate Strike on March 15, 2019, represented a historical turning point in climate activism. We investigate the cross-section of stock price reactions to this event for a large sample of European firms. The strike's unanticipated success caused a decrease in the stock prices of carbon-intensive firms. The effect appears to be driven by the increased public attention to climate activism. Furthermore, after the first Global Climate Strike financial analysts downgraded their longer-term earnings forecasts on carbon-intensive firms.
Highlights
As extreme weather events become more frequent and severe, the risks of climate change for our societies become dramatically evident
We start by focusing on cross-country differences, and we show that carbon-intensive firms located in countries with lower environmental performance experienced a negative stock price reactions
We find that negative abnormal returns are associated to firms with high carbon intensity and higher daily attention to climate activism, especially when those firms are under intense public scrutiny
Summary
As extreme weather events become more frequent and severe, the risks of climate change for our societies become dramatically evident. In addition to its potential relevance for financial markets, the first Global Climate Strike is interesting because it was organized by, and addressed to, young people in the 14-19 age group, who are unlikely to be active participants in the stock markets.2 It can be considered quasi-exogenous to investor behavior. Our results indicate that around the timing of the first Global Climate Strike, firms with higher carbon intensity experienced significantly negative cumulative abnormal returns. We start by focusing on cross-country differences, and we show that carbon-intensive firms located in countries with lower environmental performance experienced a negative stock price reactions. We find that negative abnormal returns are associated to firms with high carbon intensity and higher daily attention to climate activism, especially when those firms are under intense public scrutiny Overall, these findings suggest that the climate strike contributed to renew investors’ attention to already-existing corporate risks concerning climate change.
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