Changing Investment Behavior under Disclosure of CO₂ Emissions: An Approach with Economic Experiments

Abstract

Objective. Our study analyzes investment behavior under the condition that information such as CO₂ emissions is disclosed. To deal with such an issue, we adopt the method of economic experiments that human subjects are recruited and their economic behavior is examined under controlled laboratories. We construct the stock market model which is expanded from the preceding asset market model and into which information disclosure is incorporated.
Results and Discussion. The two cases of experiments are prepared: one is that monetary rewards are paid to human subjects based on the normal methodology in economics experiments; the other is that the amount of CO₂ reductions is directly linked to the real world by purchasing carbon offset credits of which amount is proportional to the amount of CO₂ reduction in experiments. In the first experiments, stock price that the corresponding company reduces CO₂ emissions is increasing compared with normal stock price. On the other hand, there is no difference between two stock prices in the second experiments with carbon offset credits.
Conclusions. Our experimental results imply that if investors are not monetarily incentivized for CO₂ reductions, it is difficult to reflect company’s CSR activities in stock price. Therefore, it is concluded that in order to contribute to realizing sustainable society from financial industries, some appropriate social regime like carbon tax would be required.