16 February 2023 | 1 min. readingtime
We have previously reviewed the literature on what is known as the 'carbon premium'. The idea behind this premium is that companies with high carbon emissions face additional risk (such as stranded asset risk) due to the energy transition (transition risk) and therefore offer higher yields. What is the 'carbon premium' and how can it be used to calculate a 'carbon beta'? 'Carbon beta' could potentially be used as a forward-looking measure of transition risk in a portfolio.
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