Climate Change and India’s Capital Market: Do Investors Care about Climate Change

Abstract

We examined whether India's stock market is sensitive to climate change risk and opportunity. We have used the Paris Agreement on Climate Change and Government of India's climate action plans as a proxy for climate change risk and opportunity. Our findings suggest that climate-friendly stock returns fared poorly after the significant events (The Government's announcement on climate action plans and Paris agreement). On the contrary, the carbon-intensive stocks performed reasonably. These results suggest the capital market is either indifferent to the Government's climate change mitigation plan or does not consider climate change in its investment decision making.