Are Carbon Emissions Associated with Stock Returns? Reply

Before directly addressing the Response to critique and further elaboration (hereafter “Comment”), written by Patrick Bolton and Marcin Kacperczyk (BK), a few thanks are in order. First, we thank the editor, Alex Edmans, both for providing BK the opportunity to directly comment on our paper as well as giving us the opportunity to respond. We believe that open intellectual debate is vital, especially given the topic at hand. Directly facilitating such a conversation in conjunction with the paper’s publication in RF seems to us a good way to showcase various perspectives with equal prominence. Second, we thank BK for taking up the offer to engage with us within this context. We believe direct engagement is the best way to advance scholarly debate on whether and how investors consider carbon emissions information.In what follows, we write our rejoinder to BK’s Comment in the format of a response memo, i.e., we reproduce BK’s main points (with some paraphrasing) and respond to each individually in turn. We believe this is the clearest – and, importantly, most parsimonious – way to provide our thoughts