So do we think ESG scores get transitively priced in, the way carbon pricing should work?
Like, if you make it harder for those who burn oil to raise capital, does that mean that there are fewer customers for the people who extract it? Does it hurt their profits?
Is this all passed on, magically, by the Efficient Market?
1) So news dropped today which was a big red day across the board to begin with. So if we want to quantify let's ballpark the ESG drop news in a -1B marketcap? I remind you Tesla is (amazingly) a 750B company. If they think that a -1B on hugely red day can make it harder for them to raise capital, then they are better off closing shop on all their Gigafactories because evidently there is no point in continuing the enterprise
2) Yes, it's exactly like that, punishing those who burn oil hurts those who mine oil, if it doesn't it only means that those who burn oil found a way to hide from ESG rating by becoming a private company and getting financed elsewhere eg. via private equity or using old fashioned bank loans and credit lines, or even by convincing clients to pay in advance or with less delay.
Actions and desires have consequences, the passion that people have for climate change has consequences, when you wanna get to zero you don't get to skip anything and even companies which people are emotionally attached to (such as Tesla) have to comply.
Like, if you make it harder for those who burn oil to raise capital, does that mean that there are fewer customers for the people who extract it? Does it hurt their profits?
Is this all passed on, magically, by the Efficient Market?
I suspect not.