Market reaction: extreme weather and the electricity sector

The authors of Market Reaction to Extreme Weather Events in the Electricity Sector investigate the market and its relationship to extreme weather, more prevalent over time, due to climate change. They focus on the European electricity companies, which have a diversified and geographically distributed portfolio of power plants, potentially exposed to various extreme weather events. From the abstract: “When an extreme weather event affects a power plant, investors respond negatively. Moreover, market response becomes less negative for companies with higher share of women in the board, and higher ESG scores. The results demonstrate that the market incorporates information on extreme weather events and provide guidance on the company characteristics that mitigate the reaction.” Authors: Roberto Bianchini, Polytechnic University of Milan Department of Management, Economics and Industrial Engineering; Bocconi University – BAFFI Center on International Markets, Money, and Regulation; and Vincenzo Butticè, Politecnico de Milano

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