'Carbon beta': A useful measure of transition risk?

'Carbon beta': A useful measure of transition risk?

16 February 2023 | 1 min. readingtime


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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.

  • Sustainability
  • Outlook


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Raphie Hayat

Senior investment strategist

Raphie has a PhD in economic sciences and is an investment strategist at a.s.r. vermogensbeheer who writes about the interface between macroeconomics and financial markets.

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