The Low‐carbon Equity Market: A New Alternative for Investment Diversification?

Addressing the topic of ethical investment, this paper considers stock market indices related to climate change and provides first comprehensive analysis links between low-carbon equities conventional equities. Results show that in long run, low carbon economy do not behave like indices, no balance relationship is identified two, such investors can find sector an opportunity diversify investment as alternative traditional equity investment. In short-run, two segments display identical behaviour, especially contemporary terms, with daily dynamics driven fundamentally by factors. These results will help regulators policy makers design policies for sustainable according macroprudential policies.