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

PATA U. K., Si Mohammed K., Serret V., Kartal M. T.

Borsa Istanbul Review, cilt.24, sa.4, ss.828-837, 2024 (SSCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 24 Sayı: 4
  • Basım Tarihi: 2024
  • Doi Numarası: 10.1016/j.bir.2024.04.013
  • Dergi Adı: Borsa Istanbul Review
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus, EconLit, Directory of Open Access Journals
  • Sayfa Sayıları: ss.828-837
  • Anahtar Kelimeler: Carbon pricing, Climate risks, ESG market
  • Hatay Mustafa Kemal Üniversitesi Adresli: Evet

Özet

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.