Christian Kontz (GSB): Do ESG investors care about carbon emissions?

Christian Kontz: Do ESG investors care about carbon emissions?

Evidence from securitized auto loans 

Abstract: 
Over the last decade, assets under management using environmental, social, and governance (ESG) criteria have increased tenfold. This paper shows that financial markets do not price differences in CO2 emissions of auto loans despite the rise of ESG investing. I argue that securitized auto loans present a clean empirical setting to measure ESG preferences in price and quantity data. I find that securities with high-emission pools have, on average, 5 basis points (11%) lower cost of capital. Mutual funds marketed as ESG (i) hold positions across the full distribution of CO2 emissions and (ii) invest more in higher-emission deals. Neither (i) nor (ii) are consistent with common ESG strategies.

Bio: 

Christian Kontz is a third-year Finance PhD student at Stanford Graduate School of Business. His research interest span topics in asset pricing and corporate finance related to climate finance, ESG and sustainability, and innovation. 

Website: www.christiankontz.com