Investors are punishing polluters. This is the proof.

The data shows that debt markets are also eyeing corporate emissions, but here the effects of scale are reversed. For small companies, especially in Europe, the credit default swap spread (a measure of the riskiness of a company’s debt) is higher than for those with higher emissions. . But for large companies, emissions don’t matter. Investors seem to believe, not unreasonably, that carbon emissions are an indicator of default risk for smaller, but not larger, companies.