It’s not yet clear how effective the United Nations conference underway in Glasgow will be in mitigating the most pernicious effects of global warming. But one outcome is already evident: The number of news articles about climate change is surging.
Another result of the Glasgow conference can be predicted with some confidence, too. So-called green stocks — those of companies with relatively low carbon emissions — will get a temporary boost. At the same time, brown stocks — those of companies that emit large quantities of greenhouse gases — will face a headwind.
New research indicates that the two effects are related. Three recent research papers by two groups of economists suggest that when public exposure to information about climate change spikes, investor preferences also shift, altering the performance of sectors of the stock market.
“What we’ve found is a story about climate change and the stock market,” Lubos Pastor, a professor of finance at the University of Chicago Booth School of Business, said in an interview.
“At this point, news about climate change, any news, is, at least to some extent, negative,” he said, meaning that it tends to raise public concern about the future of the planet. “As investors become more aware of the climate issue, they understand that regulations are coming, and that the situation will be beneficial to green firms and harmful to brown ones.”
That increased public attention — and the accompanying preference of many…