In the financial industry, it is common sense that carbon prices are harmful: by reducing companies’ profitability, a higher price will lower stock prices. While this may be true in the long run if carbon taxes continue to rise at a constant rate, it can be argued that in the short to medium term, a price on carbon emissions can reduce macroeconomic risk – and therefore benefit financial markets. One key condition is that the carbon price must respond to economic fluctuations. (Gauthier Vermandel)