ENVIRONMENTAL INDICATORS: CONDITIONS FOR A RELEVANT AGGREGATED MEASURE

By Jean-Guillaume Peladan, Julie Raynaud, Peter Tankov, David Zerbib

Revue d’Economie Financière, 138 (2020), special issue “Finance Climatique”

After presenting the main existing environmental indicators and their limitations, we propose a definition of the (non-exhaustive) characteristics of a relevant and efficient metric in a holistic approach: encompassing all environmental issues, analyzing the entire life cycle, using physical measures, covering a global scope of analysis, being computable across all asset classes, being modular, operational, readable, neutral, transparent, stable over time and using the information already available, given the environmental emergency. Finally, we review the main available methods for aggregating environmental indicators with their advantages and drawbacks.