Managerial and Financial Barriers to the Green Transition

Ralph De Haas, Ralf Martin, Mirabelle Muûls () and Helena Schweiger

No 15886, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using data on 10,776 firms across 22 emerging markets, we show that both credit constraints and weak green management hold back corporate investment in green technologies embodied in new machinery, equipment and vehicles. In contrast, investment in measures to explicitly reduce emissions and other pollution is mainly determined by the quality of a firm's green management and less so by binding credit constraints. Data from the European Pollutant Release and Transfer Register reveal the environmental impact of these organizational constraints. In areas where more firms are credit constrained and weakly managed, industrial facilities systematically emit more CO2 and pollutants. A counterfactual analysis shows that credit constraints and weak management have respectively kept CO2 emissions 4.5% and 2.3% above the levels that would have prevailed without such constraints. This is further corroborated by our finding that in localities where banks had to deleverage more due to the global financial crisis, carbon emissions by industrial facilities remained 5.6% higher a decade later.

Keywords: Credit constraints; Energy efficiency (search for similar items in EconPapers)
JEL-codes: D22 G32 L20 L23 Q52 Q53 (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-cfn, nep-ene, nep-env and nep-reg
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Citations: View citations in EconPapers (6)

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Working Paper: Managerial and financial barriers to the green transition (2023)
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