Economic growth is one of the major reasons for increasing levels of CO2 emissions that have the potential to accelerate climatic change and threaten our environment. However, many investors still support CO2-heavy companies financially, even though there are various associated risks for these assets with respect to climate policies and stranded assets. This study aims to thoroughly examine which investor types tend to hold a higher proportion of carbon intensive stocks. To identify high-polluting stocks we provide a classification of stocks based on three different categories related to industry sectors, carbon footprints and environmental scores. Data on year-end holdings from 2000-2015 is used to investigate whether different investor types prefer or try to avoid carbon intensive stocks in comparison to investments in peer companies. We find that inst itutional investors, hedge funds, individuals, investment advisors and mutual funds tend to hold less carbon intensive firms in their investment portfolios. Interestingly, in contrast, government agencies seem to have a higher exposure to polluting stocks in their portfolios (approximately 50%) and typically also hold a high percentage of the total market capitalization of these firms. Our results are robust against different specifications of carbon intensive companies and measures of ownership. Overall, our study provides a better understanding of the exposure to carbon intensive stocks for various investor types, but also illustrates which parties have the ability to influence environmental behavior of CO2-emitting firms, e.g. by exhibiting voting rights.      «

Economic growth is one of the major reasons for increasing levels of CO2 emissions that have the potential to accelerate climatic change and threaten our environment. However, many investors still support CO2-heavy companies financially, even though there are various associated risks for these assets with respect to climate policies and stranded assets. This study aims to thoroughly examine which investor types tend to hold a higher proportion of carbon...     »