The implications of industrial waste for financial markets

This work assesses the implications of industrial waste for financial performances of listed companies according to policy transparency. The study uses listed companies disclosing waste indicators from 2010 to 2020. An indicator of national waste policies is made to cluster nations into two major groups. Pooled regression models have been estimated to find the relationship between stock returns and industrial waste production while factoring for industry and nations. The results indicate that the financial performance of companies listed in nations with high policy transparency is negatively related to both gross industrial waste production and revenue intensity. The results have been compared with available examples in literature for waste production and carbon emissions as well. The estimates in this paper indicated that one standard deviation of waste intensity negatively affects stock performances worse than carbon emissions. This work presented therefore evidence of a potential 'circularity' transition risk accompanying the well-known climate transition risk.