New evidence the 'greenium' exists in climate projects

Growth of sustainable funds creating expectations for lower cost of capital

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(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — New research has done what dozens of prior academic studies were unable to do — find convincing evidence of a significant greenium.

I’m referring to the difference between green and brown firms’ cost of capital. The sustainable investing movement’s hope has always been that it will lower green firms’ capital cost by enough to enable them to undertake more climate-friendly projects than otherwise. But up until now there has been precious little evidence that sustainable investing was actually having this impact.