Financial Markets Platform
The Financial Markets Platform examines how capital is allocated and how financial markets shape the transition to a more sustainable economy. It focuses on how investment decisions, risk pricing, and policy influence environmental and social outcomes.
About
Financial markets play a central role in directing capital and redistributing risk across the economy. This platform studies how markets respond to sustainability challenges, including the shift toward green infrastructure and the growing importance of climate and biodiversity risks.
A key focus is on how financial tools and market mechanisms can support sustainable outcomes. This includes research on carbon pricing, green financial instruments, and investor behavior, such as shareholder engagement on environmental issues.
The platform uses insights from financial economics, empirical methods, and organizational and strategy theories to understand change processes. The goal is to better understand how capital allocation and risk management can support long-term value creation and inform decisions by investors, policymakers, and firms.
Examples of research questions
- Do financial markets effectively price climate-related risks?
- How can financial instruments and policies support the transition to a low-carbon economy?
- What limits the effectiveness of sustainable finance, and how can these barriers be addressed?
Platform Directors
Associate Professor and Docent
Swedish House of Finance
Stockholm School of Economics
Professor of Financial Economics
Stockholm University
Researcher
Swedish House of Finance
Stockholm School of Economics
Research projects
Below you will find a selection of research projects from the Financial Markets Platform. They focus on how climate policy, sustainable finance, and ESG practices shape business decisions, household behavior, and the transition to a low-carbon economy.
Ongoing projects
Impact of the EU Emissions Trading System on firm behavior and CO2 emissions
HoSS researchers:
- Christian Thomann, Associate Professor, Royal Institute of Technology
- Per Strömberg, Professor, Department of Finance, SSE
- Gustav Martinsson, Professor, Stockholm University
- Jing Wang, PhD Student, Royal Institute of Technology
- Jiayu Zhang, PhD Student, Royal Institute of Technology
- Mustafa Bulut, Postdoc Fellow, SSE
Human-induced climate change is the most pressing challenge in our quest to achieve a sustainable society. It also represents a massive market failure in need of policy intervention. Carbon pricing is often emphasized as one of the most important policy tools for achieving decarbonization and creating a more sustainable growth path for the economy. That said, there is still a paucity of comprehensive empirical evidence on whether, and if so to what extent, carbon pricing affects firm behavior and most notably firm-level carbon dioxide (CO2) emissions. This project examines the impact of the EU Emissions Trading System (EU ETS), the largest carbon pricing market in the world, on plant and firm-level emissions, performance and technical change by using and expanding a unique dataset of plant and firm-level outcomes.
Project dates: January 2023 to December 2026
This project is funded by Marianne and Marcus Wallenbergs Stiftelse and Jan Wallanders och Tom Hedelius Stiftelse.
The effect of climate policy and financing on firms’ green transition
HoSS researchers:
- Per Strömberg, Professor, Stockholm School of Economics
- Christian Thomann, Associate Professor, Royal Institute of Technology
- Gustav Martinsson, Professor, Stockholm University
- Jing Wang, PhD student, Royal Institute of Technology
- Jiayu Zhang, PhD student, Royal Institute of Technology
Climate change and biodiversity loss are among the most urgent sustainability challenges facing society, yet there remains a major financing gap for the investments needed to reach net zero and support biodiversity. This project examines how climate policy and access to finance affect firms’ green transition. In particular, it studies how carbon pricing and related regulations shape firms’ investment, innovation, production, financing conditions, and ability to manage climate risks. The project also analyzes whether current methods for evaluating green investments are too short-term, how climate policy affects firms across international production and trade systems, and how financial regulation can support the transition to a more sustainable economy. By producing evidence on how firms and financial systems respond to climate policy, the project aims to inform both policymakers and businesses on capital allocation, productivity, and technology investment decisions, including in collaboration with the Swedish Central Bank.
Project dates: December 2025 to November 2030
This project is a Formas application under the 2024 call “Development of sustainable finance and investment for a sustainable climate transition.” The application covers five years and has SEK 18,673,638 in funding.
Evaluating the Economic Effects of Environmental Regulations in the Swedish Trucking Industry
HoSS researchers:
- Per Strömberg, Professor, Stockholm School of Economics
- Christian Thomann, Associate Professor, Royal Institute of Technology
- Gustav Martinsson, Professor, Stockholm University
- Jiayu Zhang, PhD student, Royal Institute of Technology
This project examines how environmental regulations and policy-induced fuel cost increases affect firm-level efficiency, emissions, and industry structure in the Swedish road freight sector. Focusing on the trucking industry, it studies how higher diesel prices driven by carbon taxation and biofuel blending requirements influence competitiveness, output, investment, productivity, vehicle kilometers driven, and carbon emissions. Using linked microdata at the truck and firm level for 2007–2022, the project aims to trace how transport policy affects individual vehicles, the firms that own them, and the broader composition of the sector. The research is intended to inform the design of transport policies by clarifying the trade-offs between emissions reductions, efficiency gains, and short-run cost pressures on firms.
Project dates: September 2024 to August 2027
This project was submitted to Trafikverket’s targeted call in transport economics, under the Planera portfolio, by the Swedish House of Finance at SSE.
Financing the Transition: Evidence on Green Loans and Household Behavior
HoSS researcher:
- Marieke Bos, Associate Professor, Swedish House of Finance, SSE
Other researchers and collaborators:
- Navid Akbaripour, SSE
- Ehsan Mahdikhani, SSE
- Arna Olafsson, Copenhagen Business School
Using transaction–level bank data, this project exploits the introduction of a discounted green car loan program and random lottery windfalls as natural experiments to identify the impacts of electric vehicle (EV) adoption via green loans on household spending behavior and finances. It shows that households financing EV purchases with green loans reduce gasoline expenditures by roughly 30% on average, increase electricity bills by ∼ 26%, and achieve net monthly savings of ∼ $34 in vehicle energy costs.
The project also finds that the discounted green car loan program significantly increased EV purchases among households previously owning gasoline vehicles, effectively accelerating the replacement of internal-combustion-engine cars with EVs. Random lottery wins provide further evidence that relaxing liquidity constraints drives green adoption: winning a cash prize raises EV purchases via green loans by 20 percentage points, even among consumers without prior environmental leanings. The findings highlight that preferential green credit can deliver both climate and financial benefits while underscoring the role of liquidity constraints in sustainable adoption.
This project is partly financed by VINNOVA.
Completed projects
Monetizing sustainability
HoSS researcher:
- Emma Sjöström, SSE
Other researchers:
- Hanna Setterberg, SSE
- Rachelle Belinga, California Lutheran University
Main project stakeholder:
- Trill Impact
A growing number of investors are seeking to integrate environmental, social and governance (ESG) issues into financial analysis and decision making. Many struggle, however, with combining non-financial ESG data with highly quantitative and financialized investment models. Pioneering investors are currently attempting to resolve this challenge by translating ESG metrics into monetary terms, e.g. estimating a cost of carbon or a cost of water. To capture how the monetization of sustainability is organized by financial actors, this project followed the Swedish private equity investor Trill Impact in real-time for 24 months as it began its “trial and error” journey toward developing methods for monetization. The research results help inform the future decisions of financial market participants when integrating and monetizing sustainability, and expand current theoretical debates about the financialization of ESG.
Project dates: June 2022 to May 2024
This project was funded by Vinnova.
Impact of corporate governance on carbon emissions
HoSS researchers:
- Per Strömberg, Professor, Stockholm School of Economics
- Gustav Martinsson, Professor, Stockholm University
- Christian Thomann, Associate Professor, Royal Institute of Technology
This project examined how ownership structure, through its effects on corporate governance, influences firms’ carbon dioxide emissions and related activities. Using detailed Swedish micro-level data that link firm-level CO2 emissions from industrial facilities and transport with ownership information, the project studied whether changes in ownership affect firms’ environmental performance. It also analyzes the conflict between profit maximization and climate mitigation, including how corporate governance shapes firms’ responses to environmental policy changes such as carbon taxation. The research aimed to generate policy-relevant evidence on how ownership and governance can support more effective reductions in corporate emissions.
Project dates: January 2021 to December 2024
This project was submitted to the Swedish Research Council under the 2020 large call in Humanities and Social Sciences as a project grant. The application listed Gustav Martinsson and Christian Thomann as participating researchers, covered four years, and sought SEK 5,791,000 in funding.
Integrating sustainability in investment analysis
HoSS researcher:
- Emma Sjöström, SSE
Other researchers:
- Hanna Setterberg, SSE
- Rachelle Belinga, California Lutheran University
Main project stakeholder:
- Swedish Sustainable Investment Forum (SWESIF)
This study explored whether and how financial market actors integrate sustainability in the investment analysis of companies. Specifically, we focused on the relationships and interactions between financial analysts, portfolio managers and stock-listed corporations, since these actor-groups regularly exchange both financial and non-financial information. We note that there has been a marked increase in financial analysts’ focus on sustainability during especially the past two years. The study forwards three major drivers of this change: investors’ growing interest in ESG issues which spurs demand for broader analysis, the EU taxonomy on green economic activities which presents a new research opportunity for financial analysts, and an increased understanding of the financial relevance of sustainability-related issues. The project report offers recommendations for a more ambitious understanding of ESG integration for both financial actors and policymakers.
Project start date: 2021
This project was funded by Swesif.
How do acquisitions affect the mental health of employees?
HoSS researchers:
- Ramin Baghai, Professor, SSE
- Marieke Bos, Associate Professor, SSE
Other researchers or collaborators:
- ESSEC Paris
- Nova School of Business and Economics
The project team investigated if and how mergers and acquisitions (M&As) affect the mental health of employees. Through mergers, firm boundaries are redrawn and internal work processes are reorganized. These changes may transform the scope and nature of jobs and may lead to dismissals. The uncertainty, anxiety, and stress caused by such events may have a profound impact on the workers in the affected firms. Using unique employer-employee matched data on all M&A transactions in Sweden from 2007 to 2015 and analyzing employees’ individual health outcomes based on their medical records, the project found that the incidence of stress, anxiety, depression, psychiatric medication usage, and even suicide increase following acquisitions. The research shows how corporate decisions affect a broader set of the firms’ stakeholders, beyond the firms’ own shareholders and creditors. Mental health is a key determinant of individual well-being, and economies incur significant costs due to mental illness in the population. Thus, the project’s insights can contribute to the formulation of corporate and government policies that foster a more sustainable workforce.
Project start date: 2020
This project was funded by NASDAQ Nordic Foundation and Misum (now HoSS).
ESG in the earnings call context
HoSS researchers:
- Emma Sjöström, SSE
- Florian Eugster, University of St. Gallen
This project aimed to uncover the intensity of climate information in quarterly earnings conferences over a time period of twenty years. The earnings call is one of the most important interfaces between the company and financial analysts, and the project hypothesized that for companies in industries where climate change is a material issue, the intensity of climate change-related disclosures in the call, as well as questions raised by analysts in the Q&A session, will increase over time. This research project feeds into a broader research theme at the Financial Markets Platform on integrating ESG in the capital market conversation.
This project received partial funding from Mistra, the Swedish Foundation for Strategic Environmental Research.
Financing municipal sustainable city plans
HoSS researcher:
- Emma Sjöström, SSE
Other researchers:
- Nina Waltré, SSE
Together with Stockholm Environment Institute (SEI) and CleanTech Scandinavia (CTS), this project explored the scope of Swedish municipalities’ sustainability plans, what level of financing is needed in order to achieve the plans, and to what extent private capital might help to fill any gaps.
The project was funded by Viable Cities.
Shades of green: why firms issue green bonds
HoSS researcher:
- Ramin Baghai, Professor, SSE
This project studied the economic function of the market for corporate green bonds. It developed a simple theoretical framework of green bond issuance in a setting where investors who value sustainability can invest in both the debt and equity of firms. Model predictions were tested using a unique database of green bond issuance and secondary market bond prices. To calculate the relative price of green bonds, we match green bonds with similar ordinary bonds of the same issuer. Green bonds have lower yields. The relationship between the overall sustainability of a firm’s assets and the benefits from the green bond issuance is inverse U-shaped: intermediately sustainable firms benefit the most from this market. The results demonstrate how credit markets have an advantage (over equity markets) in allowing differential costs of capital for investments of the same firm but with different sustainability.
Shareholder engagement on climate risk
HoSS researchers:
- Emma Sjöström, SSE
- Rieneke Slager, Misum Research Fellow 2020/2021
- Jean-Pascal Gond, Misum Research Fellow 2019
This project followed a three-year shareholder engagement process with 20 publicly listed utility companies, on the theme of carbon risk. The processes were led by a Scandinavian engagement intermediary. The project explored which factors lead to a more or less successful engagement, but also what different roles the engager takes on and what that means for the process.
This project received partial funding from Vinnova and from Mistra, the Swedish Foundation for Strategic Environmental Research.
