Three Essays on Sustainable Finance: Canadian Physical Costs of Climate Change, Global Carbon Prices and the Costs of Climate Change, and, Environmental and Disclosure Performance: A Study of CA 100+ Companies
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Authors
Willcott, Neal
Date
2024-03-01
Type
thesis
Language
eng
Keyword
Sustainable Finance, DICE Model, Cost of Climate Change, Climate Finance, Sustainability, Economics
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Abstract
Sustainable finance has been increasingly gaining prominence in mainstream financial studies. The consideration of sustainability concerns within the sphere of finance has significant economic implications for society, investors, and beyond. In the past decade, the severity of climate change and its associated costs has spurred conversations about how to safeguard our prosperity in the face of this growing concern. These questions form the fundamental motivation for the study of how global climate change influences economic outcomes and firm performance and cost of equity. Specifically, this thesis is motivated by areas within sustainable finance that demand further research. The results from the first essay provide insight into the economic costs to Canada across several temperature outcomes leading into 2100. Using the Dynamic Integrated Climate and Economic (DICE) model, we project that climate change mitigation efforts that lead to a 2oC outcome more than pay for themselves in avoided climate costs from physical damages. The second essay investigates the climate change outcomes under varying global average carbon prices. We find that a global carbon price, while playing a critical role, will not be sufficient to meet our Paris Climate Agreement goals of limiting our global temperature increase to 1.5-2oC above pre-industrial levels by 2100. We also project significant differences in global physical costs, highlighting the urgency of taking action to mitigate global warming. The third essay investigates how environmental and disclosure performance influences firm’s return performance and cost of equity. We examine CA 100+ and find that they outperform other world indices in returns at a lower standard deviation, indicating stochastic dominance performance. We further find that the 2022 cost of equity (CoE) estimates for CA 100+ firms are in line with expectations after adjusting for country and industry impacts. We also find that, among CA 100+ firms, those that performed the worst environmentally and regarding disclosures had a lower CoE, contrary to expectations.
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Attribution 4.0 International
ProQuest PhD and Master's Theses International Dissemination Agreement
Intellectual Property Guidelines at Queen's University
Copying and Preserving Your Thesis
This publication is made available by the authority of the copyright owner solely for the purpose of private study and research and may not be copied or reproduced except as permitted by the copyright laws without written authority from the copyright owner.
Attribution 4.0 International