The Sustainable Finance and Investment Seminar (CEE 157/257), led by Soh Young In, is a 1-unit course which aims to equip the Stanford community with the knowledge and networks required to undertake significant future work on sustainable finance and investment. The course is open to students, faculty, and staff in the Stanford community. CEE 157/257 meets every Friday from 8:30 - 9:20 am PST (with noted exceptions) during fall quarter (Remote: Synchronous).

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Using evidence from the EU emissions trading system, Olimpia Carradori, Margherita Giuzio, Sujit Kapadia, Dilyara Salakhova, and Katia Vozian collect verified emissions of close to 4,000 highly polluting and mostly non-listed firms responsible for 26% of EU’s emissions. Over the period 2013 - 2019, they find a non-linear relationship between leverage and emissions. A firm with higher leverage has lower emissions in subsequent years. However, when leverage exceeds 50%, a further increase is associated with higher emissions. Their difference-in-differences approach sheds light on the existence of a group of firms that are too indebted to successfully accomplish the low-carbon transition, even when they are exposed to the steeply increasing cost of their emissions.

Recommended reading:

• Martin, R., M. Muûls, and U. J. Wagner (2020): “The impact of the European Union Emissions Trading Scheme on regulated firms: what is the evidence after ten years?”, Review of environmental economics and policy.
• OECD (2021), Effective Carbon Rates 2021: Pricing Carbon Emissions through Taxes and Emissions Trading, OECD Series on Carbon Pricing and Energy Taxation, OECD Publishing, Paris.
• De Haas, R., R. Martin, M. Muûls, and H. Schweiger (2022): “Managerial and Financial Barriers during the Green Transition”, CentER Discussion Paper Nr. 2021-008, European Banking Center Nr. 2021-002.

Speaker bio:

Olimpia Carradori is a PhD candidate in finance at the University of Zurich (Swiss Finance Institute) and academic consultant at the European Central Bank, where she pursues research in the field of sustainable finance. Her research interests are sustainable finance, its intersections with climate justice and climate risks to financial stability.