Carbon Intensity Bumps on the Way to Net Zero

Frédéric Ducoulombier, Victor Liu

2021 | Academic | Climate, Net-Zero

Substituting enterprise value for revenues for the computation of carbon intensity, far from simply hurting sectors exposed to stranding risks, predictably benefits issuers associated with expectations of higher profitability, higher growth, and lower risk. The substitution introduces capital market volatility into measurement, which significantly weakens the link between carbon intensity and real-world decarbonization; impact-concerned investors should favor the traditional metric.