Green Stock Indices and the Stock Market | Understanding the economy on your side | EconomyX

Since the 1950s, we have seen more and more extreme weather, with rising temperatures, rising sea levels, and even more precipitation. However, in 2014, the Intergovernmental Panel on Climate Change (IPCC) said that humans are likely to be the main cause of the problem. through greenhouse gases. In response to this report, in 2015, the Paris Agreement was signed: 183 of the 197 Parties committed to reduce global warming to below 2 degrees compared to the pre-industrial level. Therefore, in order to be able to keep these agreements, a major change in the functioning of our economy is necessary. However, economic policies alone such as taxes or carbon pricing may not be enough. So money seems to be a very important part of supporting the growth of money green.

What is money? green ?

Money green is an investment in a profitable sector whose main activities are said to be “non-destructive” to the environment. Defining what is “environmentally friendly” is not easy, as it will depend on what it is used for. However, it is important to note that renewable energy projects, energy use, or wastewater treatment are considered green. Today, we are seeing tremendous growth in these businesses green, although the duration of the global epidemic has led to a gradual decrease in the end. The main leaders are China, Europe and the United States. Also, projects green they are often supported through the case of shares or bonds. Therefore, index index green is a share of equity made by companies whose main activities are said to be “environmentally friendly”.

Correlation between stock indices green and financial markets:

Faced with the growing demand for these financial products, we wonder about the correlation between market indices green and financial markets. That is, how it happens to shake the stock indices green affect financial markets, and how do shocks in financial markets affect stocks green. First, stock indices green it is closely related to the financial markets; however, on average, they are more threatened than transmitted. Second, the connection with market indicators green and firm and indices of the sector of materials, industry, and economy. Two reasons explain this, firstly these three sectors are said to be open to finance; the more companies do business with foreign countries, the more likely they are to receive or transmit shocks. The second reason is that environmental companies and companies in the equipment and industrial sector produce similar products. For example, turbines for the wind power sector or photovoltaic panels for the solar power sector.

Finally :

Remember that it is wise to invest in projects green through economic factors green. However, we must not forget that these things are risky, because they are related to the financial markets and especially to the materials, industries and the financial sector.