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Do Investors care about the Rainforest? Evidence from Voluntary Carbon Offsets around the World

Author

Listed:
  • Franklin Allen

    (Imperial College London; European Corporate Governance Institute (ECGI))

  • Patrick Behr

    (Independent)

  • Riccardo Cosenza

    (USI Lugano)

  • Eric Nowak

    (Swiss Finance Institute; Universita della Svizzera Italiana (USI Lugano))

Abstract

We explore how investors react to firms' biodiversity-focused activities in the Voluntary Carbon Market. The average stock price reaction of forestry carbon offsetting with and without biodiversity impact is not significantly different from zero until the end of 2022. Following a Guardian article claiming rainforest carbon offsets to be 'worthless' in January 2023, the announcement returns to carbon credit retirements turned significantly negative. This effect is not significant for carbon credits contributing to biodiversity conservation certified by the Climate, Community & Biodiversity CCB Standard, but it is significantly negative for other credits. Our results show that investors care about both the biodiversity impact of carbon credits as well as the climate-change mitigation integrity of offsetting activities.

Suggested Citation

  • Franklin Allen & Patrick Behr & Riccardo Cosenza & Eric Nowak, 2025. "Do Investors care about the Rainforest? Evidence from Voluntary Carbon Offsets around the World," Swiss Finance Institute Research Paper Series 25-85, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2585
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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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