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Assessing the influence of climate risk, carbon allowances, and technological factors on the ESG market in the European union

Author

Listed:
  • Ugur Korkut Pata

    (LAU - Lebanese American University, Korea University [Seoul])

  • Kamel Si Mohammed

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine, UBBAT - Université Ain Temouchent Belhadj Bouchaib = Ain Temouchent University Belhadj Bouchaib)

  • Vanessa Serret

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

  • Mustafa Tevfik Kartal

    (Khazar University, LAU - Lebanese American University, GUST - Gulf University for Science and Technology, Korea University [Seoul])

Abstract

Environmental, Social, and Governance (ESG) is a market for environmental criteria that has recently attracted the attention of policymakers and in particular European Union (EU) countries to improve environmental quality. In the context of the EU Sustainable Development Goals, this study aims to examine the impact of climate risk uncertainties (transitional (TRI) and physical (PRI)), carbon allowances (EU ETS), and technology index (MSCI) on the ESG market. To this end, the study uses a quantile-on-quantile regression and its multivariate version for the period from November 28, 2007, to January 05, 2023. The results show that TRI and PRI increase ESG market development at higher quantiles, while EU ETS and technological progress reduce ESG progress. This shows that the risk of climate change requires the introduction of stricter environmental standards in EU countries, while the EU ETS and technological progress provide environmental benefits that reduce the need for the ESG market.

Suggested Citation

  • Ugur Korkut Pata & Kamel Si Mohammed & Vanessa Serret & Mustafa Tevfik Kartal, 2024. "Assessing the influence of climate risk, carbon allowances, and technological factors on the ESG market in the European union," Post-Print hal-05553243, HAL.
    • Handle: RePEc:hal:journl:hal-05553243
    DOI: 10.1016/j.bir.2024.04.013
    Note: View the original document on HAL open archive server: https://hal.science/hal-05553243v1
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    References listed on IDEAS

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    1. Ozturk, Serda Selin & Demirer, Riza & Gupta, Rangan, 2022. "Climate uncertainty and carbon emissions prices: The relative roles of transition and physical climate risks," Economics Letters, Elsevier, vol. 217(C).
    2. René Aïd & Sara Biagini, 2023. "Optimal dynamic regulation of carbon emissions market," Mathematical Finance, Wiley Blackwell, vol. 33(1), pages 80-115, January.
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