CMSI: Carbon Market Sentiment Index with AI Text Analytics

Climate change is an increasing environment concern, carbon markets are received attention because they can reduce emissions by carbon trading. With the rising in sustainable finance demand, there need some innovative tools to study investors' attitude. Although there has been an increasing amount of literature on market indicator and sentiment analysis, there is a limited research focus on carbon market. Therefore, this research purpose is to develop carbon market sentiment indicator. The research method contains three mainly phase. By using pretrained models like BERT, GPT, and so on, the research can obtain sentiment analysis results from news and social media data. Then, taking a specific carbon market as the object, and the selected sentiment indicators, the carbon market response for a period can be obtained at last. Due to complexity and the lack of transparency in the institutional and financial infrastructure for carbon market transactions, there has the problem of market volatility. The contribution of research is that provides a comprehensive sentiment index for carbon market. By this way, the research expects to provide valuable insights into sustainable finance and help investors to make better decision.