Do Investors Reward Countries for Participating in Climate Agreements?

Do Investors Reward Countries for Participating in Climate Agreements? | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Do Investors Reward Countries for Participating in Climate Agreements? Konark Saxena, Mandeep Singh This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-2775978/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Yes. The reward is a decline in sovereign bond yields of countries that commit to reducing greenhouse gas emissions under a climate agreement. This decrease is likely due to climate-aware investors incentivizing governments for such climate-friendly decisions. Transition and regulatory climate risks are expected to increase after signing a climate agreement, so they cannot explain a decrease in yields. Exposures to physical climate risks play a role, but their effect is weaker than the incentive effect. Overall, our findings suggest that climate-aware investors are nudging governments to cooperate in international climate agreements. Environmental Policy Finance Environmental Economics Climate Agreements Sovereign Bonds Investor Tastes Investor Coordination Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. 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