Financial markets and environmental information

While the attention of the financial community on environmental matters is relatively recent, accounting academics have since long focused on the role of corporate environmental disclosures in financial markets. This chapter provides an overview of this literature, covering both research that employs statistical methods to investigate the relationship between environmental disclosure and market outcomes, and experiments and survey studies that are useful to understand investment decisions and investor preferences. This chapter further presents recent institutional initiatives on environmental reporting, specifically around climate change issues, which have become important for the financial industry and markets in the aftermath of the Paris Agreement. It concludes by reflecting on the public interest function of environmental reporting vis-à-vis its role for financial market participants, highlighting potential risks and challenges.