Do Investors Value Environmental Sustainability? Evidence from the Ftse Environmental Opportunities 100 Index

To examine whether investors value environmental sustainability, we analyze stock market reactions of the firms added to or deleted from the FTSE Environmental Opportunities 100 index (FTSE EO 100). Firms added to the FTSE EO 100 that were not previously in the FTSE EO and firms removed from the FTSE EO index series altogether do not show significant stock price changes. In contrast, firms added to the FTSE EO 100 from the FTSE EO exhibit a sustained stock price gain, whereas deletions from the FTSE EO 100 that still stay in the FTSE EO show a sustained stock price decline