Carbon Home Bias
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Series
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SpeakersMarcin Kacperczyk (Imperial College London, United Kingdom)
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FieldFinance, Accounting and Finance
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LocationErasmus University Rotterdam, Campus Woudestein, Sanders 0-12
Rotterdam -
Date and time
May 20, 2025
11:45 - 13:00
Abstract
We
undertake a global analysis of institutional investor portfolios and find
widespread underweighting of companies with higher carbon emissions, both in
levels and intensities. This underweighting is largely driven by foreign
companies with high carbon emissions, both at the intensive (tilting) and
extensive (exclusion) margins. Domestic firms with high emissions are
overweighted but by a smaller magnitude. These results reveal a bias for
domestic companies with high carbon emissions. The carbon home bias is stronger
in settings where institutions have tighter business connections, in countries
with weaker social norms regarding climate crisis, and where the political
environment is more polarized.