Researchers at the University of Otago, University of California Davis and University of California Berkeley have concluded the greater the carbon emissions, the lower a company's share price and therefore the company's value.
Associate Professor David Lont, of the University of Otago's department of accountancy and finance, said the study had wider implications about company information disclosure rules.
"It is essentially saying it is a pretty important valuation marker," he said in an interview.
The study was not definitive to link carbon emission information with the size of stock value response, but Dr Lont said there appeared to be a 2% response between the share price of a company with high intensity emissions and those with low intensity emissions.
"Markets are treating this now as if this is going to change the valuation of firms," he said.
Carbon emissions now seemed a mainstream issue for investors.
"Our dual research approach produces internally consistent evidence that investors value companies differently, conditional on greenhouse gas emissions," the researchers concluded.
Dr Long said the research could help provide regulatory guidance on what, and how much, companies should disclose to investors about climate change and greenhouse gas emissions.
Institute of Directors acting chief executive William Whittaker, said the method of disclosing greenhouse gas emissions was important.
"The Institute of Directors supports the development and application and monitoring of reporting standards, so long as these are relevant, able to be achieved and not so administratively cumbersome as to significantly interfere with the company's principal purpose, which is to increase shareholder value through enhanced productivity and efficiency."
He said the heart of the issue was accountability, responsibility and transparency.
"Good companies take all these seriously and, as the study revealed, some don't need mandatory disclosure to keep investors and markets informed."
The researchers, Dr Lont, Paul Griffin and Yuan Sun, analysed four years of data, from 2006 to 2009, on firms listed on the Standard & Poor's 500 and five years, 2005-09, for the top 200 publicly traded firms in Canada.
They looked at half-year and annual reports, and company disclosures which mentioned key words to do with carbon emissions and climate change. They found markets responded almost immediately when a company reported an event related to climate change, especially companies with large carbon emissions, such as utilities and energy.
Not making any disclosure on carbon emissions did not exclude a company from analysis, said Dr Lont.
They estimated emissions from companies which did not make disclosures, and found the market reacted in the same way as for those that did make disclosures.
"This analysis therefore, suggests that stock prices reflect some greenhouse gas information, irrespective of whether or not the company makes a formal disclosure."
Dr Lont said the type of research meant it was not possible to link the type of announcement and the market response. To do so would require a much larger and more complex study.
New Zealand's largest emitters were not publicly listed, but investors still factored in carbon emission exposure in valuations of private companies.
Publicly listed Contact Energy and Fletcher Building disclosed information on their carbon emissions.
Investors were aware companies would face liabilities from the emissions trading scheme (ETS) but there could also be costs to companies of offsetting emissions through carbon sinks or forest plantings, and efficiency benefits from new technology.
Dr Lont said mandatory disclosure of greenhouse gas emissions from January 1, 2010 for those participating in New Zealand's ETS would help determine the effect on company valuations more accurately.
In the United States the Securities and Exchange Commission does not require companies to report carbon emissions, but many, along with some Canadian companies, do so voluntarily through the United Kingdom organisation Carbon Disclosure Project (CDP). The CDP has expressed an interest on the researchers' findings.
While there was no carbon emission disclosure requirement at US federal level, some states were moving in that direction, with California introducing a cap-and-trade scheme for those emitting more than 25,000 tonnes of greenhouse gas a year.
Green Party co-leader Russel Norman said company management and boards had a fiduciary duty to disclose greenhouse gas emission information because it affected share prices and investors had a right to know.
Failure to do so could lead to litigation if investors lost money as a result of directors and management withholding information relevant to company valuation.
"That is where we are all going with this."
The Green Party has advocated investing based on ethical grounds.
