Giulia Crippa
Education: Ph.D. ’26, Princeton University
Cornell Faculty Mentor: David Ng, Cornell SC Johnson College of Business / Dyson School
External Adviser: Julien Mazzacurati, European Securities and Markets Authority (ESMA)
Themes: Reducing Climate Risks
The Environmental Cost of Missing Information
Financial markets are expected to accelerate the low-carbon transition by rewarding firms that credibly disclose their environmental performance. In theory, investors should price climate risk by granting a lower cost of capital to firms that cut emissions or invest in cleaner technologies, the so-called greenium. In practice, this mechanism is weakened by incomplete and strategically biased information. High-emitting firms often withhold or selectively report carbon data, creating a systematic understatement of emissions that misleads investors and regulators. This information failure undermines both market efficiency and the credibility of climate-risk pricing.
This project quantifies how disclosure gaps translate into measurable environmental harm, integrating firm-level disclosure incentives with market-level capital allocation. The first component develops a structural model in which firms optimally decide whether to disclose emissions given regulatory, reputational, and precision-related costs. The second embeds these mechanisms into an equilibrium asset-pricing model to trace how biased information affects expected returns and reallocates investment toward carbon-intensive sectors.
Empirical analyses combine global carbon-reporting and assurance datasets with institutional portfolio holdings. The project will estimate the magnitude of hidden financed emissions and assess how mandatory disclosure reforms improve both informational integrity and environmental outcomes.
By linking information frictions to real-world emissions, the project provides an integrated framework for understanding how financial disclosure design can reduce climate risk and support the transition to a sustainable economy.