Green sentiment: what impact on stock returns and firms’ behaviour?

The past decade has seen significant changes in the way investors perceive environmental risks. There are several reasons for that. First, the information available on the costs of climate change has grown considerably, for example on major hurricanes (Katrina and Sandy, for example), or wildfires. In addition, various regulatory actions have emerged, especially in Europe (the European Commission action plan for sustainable finance, green taxonomy, European labels, etc.), to improve the transparency of available climate information and encourage investors to take environmental criteria into account in their portfolio construction.