Limits to Private Climate Change Mitigation

Dalya Elmalt, Divya Kirti and Deniz Igan

No 2021/112, IMF Working Papers from International Monetary Fund

Abstract: As climate change looms larger, many look to sustainable investing that incorporates environmental, social, and governance (ESG) concerns as part of the way forward. To assess scope for ESG-conscious investing to achieve climate change goals, we explore the link between emissions growth and ESG scores using firm-level data for the largest emitters around the world. Discouragingly, our analysis uncovers at best a weak relationship: firms with better ESG scores do display somewhat slower emissions growth but this link is substantially attenuated and no longer statistically significant if we limit attention to within-country or within-firm variation. Our findings suggest limited scope for sustainable investing strategies conditioned solely on ESG indicators to meaningfully help mitigate climate change and, more broadly, underscore the need to continue to build consensus towards effective economy-wide policies to address climate change.

Keywords: climate change goal; ESG score; emissions growth; ESG indicator; climate change mitigation; Corporate social responsibility; Climate change; Greenhouse gas emissions; Climate finance; Global (search for similar items in EconPapers)
Pages: 48
Date: 2021-04-29
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (5)

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Working Paper: Limits to Private Climate Change Mitigation (2021)
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