Evaluation of Carbon Performance of Stock Portfolio: An Analysis Based on the EIO-LCA Method

Abstract

Abstract: Guided by the principle of sustainable development, a consensus on ecological value of green investment has been reached. However, there is limited attention on evaluating environmental performance of investment portfolio. This paper focuses on the method of evaluating carbon performance of stock portfolio and its empirical application. An environmental matrix is set up to assess the relations between environmental performance and financial returns of portfolio. The method of EIO-LCA is adopted to examine carbon performance of chosen traditional and green portfolios. Its dynamic changes over 2012-2015 is traced down. Finally, the calculation of carbon footprint by unit investment is used for “green” investment decisions. The study brings many new findings, contributing new and direct evidences to understanding green investment in China, as well as references for institutional decision makings towards greener investors. The study aims to contribute to theoretical and methodological thinking in evaluating environmental performance of various financial assets.

Key words: green finance, green investment, stock portfolio, carbon performance

Wei Ping, Shu Hao. Evaluation of Carbon Performance of Stock Portfolio: An Analysis Based on the EIO-LCA Method[J]. Management Review, 2021, 33(4): 24-39.

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