Transparency has been a growing business trend over the past several years, especially in the sustainability arena. A new study reveals that jumping on the transparency bandwagon may be good for a company’s bottom line. A new study reveals a correlation between a carbon disclosure announcement and an increase in the price of the company’s stock.
Researchers at the University of California, Davis and the University of California, Berkeley examined the stock prices of 172 companies two days before and two days after each company made a carbon disclosure announcement via the CSR newswire service. These figures were then compared to similar companies that did not make an announcement.
On average, prices increased about ½ percent over that five-day period for companies releasing greenhouse gas emissions data. Smaller companies realized a bigger jump in shares, averaging a 2.32 percent increase in stock value during the five-day study period.
According to the report, Going Green: Market Reaction to CSR Newswire Releases, “Our sample of disclosing companies received an aggregate market value boost from their CSR newswire releases of approximately ten billion dollars, independent of differences in public information availability.”
Ten billion dollars – now that is a lot of money. Maybe there really is something behind the phrase, “it pays to go green.”