Publication of carbon assessments and companies’ financing costs

Chart 1: Effect of publishing greenhouse gas emissions on financing costs

Evidence of a “green premium” particularly for listed companies

Taking climate transition risks into account within the financial system is a major challenge, both for its participants and for central banks. At a time when French and European regulations are aiming to make the risks borne by companies more transparent, it is essential to understand how companies’ disclosure of their greenhouse gas (GHG) emissions data and their transition plans affect their financing costs. 

The literature agrees on the existence of a “green premium” for the least polluting companies (

… but which depend on companies’ reported emission reduction targets

The effect of reported emissions on financing costs also depends on the emission reduction targets disclosed jointly. We assess this effect by interacting the level of direct emissions with the associated reduction target, expressed as a percentage of reported direct emissions. The effect of a 1% increase in reported emissions on financing costs declines as the reported targets become increasingly ambitious (Chart 3). For companies that report that they have no emissions reduction targets, a 1% increase in reported emissions is associated, on average, with a near 0.0015 percentage point increase in financing costs – an above average effect. By contrast, for companies with the stated aim of reducing their emissions by 50%, the effect of an increase in reported emissions is close to zero. This mitigation effect becomes all the more pronounced as a company’s level of emissions increases. This finding too is consistent with results from the recent literature (Chart 3: Reduction targets influence the effect of emissions disclosure