The impact of the EU Emissions Trading System on the ESG performance score of European companies

Abstract

The goal of this study is to analyse the correlation between the price of carbon within the EU ETS framework and the evolution of the ESG score of various European companies. In order to find consistent data, we focus on the companies of a selected number of sectors of the Euro Stoxx 600 index. By doing so, we have found on Refinitiv Eikon Datastream, a consistent set of ESG data of companies most susceptible to have been influcenced by the price of carbon within the EU ETS. Lastly, we analyse the environmental and managerial actions companies can take and how they can impact their ESG scores in a carbon-pricing environment. As a result, we demonstrated that there exists a statistically significant positive impact of carbon price on the various ESG scores of carbon-intensive companies of the STOXX Europe 600 Index during the period 2008 to 2021.