---
title: Climate Policy and Market Volatility
url: https://www.ml-quant.com/papers/ssrn/4910163/
site: ML-Quant (https://www.ml-quant.com)
updated: 2026-09-26
license: Summaries CC BY 4.0; links go to the original sources
index: https://www.ml-quant.com/llms.txt
identifier: SSRN 4910163
source_url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4910163
featured: 2024-07-31
citations: unknown
topic: Derivatives & Volatility
---


# Climate Policy and Market Volatility

The research shows that transition climate policies are negatively priced in clean returns and positively priced in carbon-intensive returns.

- Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4910163
- Identifier: SSRN 4910163
- Released: 2024-06-01
- First featured: Quant Letter No. 59 (2024-07-31): https://www.ml-quant.com/issues/2024-07-31/
- Citations (Semantic Scholar): not tracked
- Published in: not yet
- Topic: Derivatives & Volatility

## Related

- [Natural Capital as a Stock Option](https://www.ml-quant.com/papers/arxiv/2404.14041/): The article proposes treating Earth's natural capital as a stock option to maintain and restore ecosystems, in response to the climate crisis caused by excessive fossil fuel use.
- [Investigate The ESG Score Methodology](https://www.ml-quant.com/papers/arxiv/2312.00202/): The paper compares the predictive power of raw and aggregated Environmental, Social, and Governance (ESG) scores on company stock returns and volatility, with raw ESG data proving most predictive.
- [Climate Risk and Financial Markets: The Case of Green Derivatives](https://www.ml-quant.com/papers/ssrn/4615427/): The EU Green Deal aims to make Europe carbon-neutral by 2050, requiring 1 trillion euro in sustainable investments, with derivatives markets and 'green derivatives' crucial for managing climate risk.
- ['I'm Stranded': Transition Risk Information in CDS and Options](https://www.ml-quant.com/papers/ssrn/4551442/): The research uses CDS and put option prices to gauge the likelihood and impact of climate change policy-related transition risk events, creating a reliable CDS-based index.
- [Carbon Risk Hedging with Beta Hedge Ratio](https://www.ml-quant.com/papers/repec/wsi-ijtafx-v-27-y-2024-i-01-n-s0219024924500067/): A new hedge strategy has been created to reduce carbon risk in diverse portfolios, which lowers carbon beta without major losses in risk-adjusted returns, making it a suitable strategy for investors and fund managers.
- [Target Volatility Strategy](https://www.ml-quant.com/papers/ssrn/4922608/): A novel investment strategy that adapts to interest rate fluctuations could enhance the sustainability of retirement funds, ensuring more dependable post-retirement support.
