Socially responsible investing and multinationals' environmental harm: Evidence from global remote sensing data

Virginia Gianinazzi, Victoire Girard, Mehdi Lehlali and Melissa Prado

No 19611, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines the relationship between socially responsible institutional ownership and the environmental outcomes of multinational firms. We combine satellite-based measures of vegetation health, inversely correlated with industrial pollution, with institutional ownership data for 52,806 production facilities operated by 911 publicly listed multinationals across 124 countries. Exploiting within-firm variation over time, we find that increases in responsible ownership improve local environmental conditions. Quasi-experimental evidence from asset manager mergers confirms these findings. The effects are heterogeneous: environmental conditions improve around OECD-based facilities but deteriorate around non-OECD operations of the same firms, especially when ownership concentrates among high-engagement investors.

Keywords: Social responsible investing; Institutional investors; Multinational enterprises (search for similar items in EconPapers)
JEL-codes: F23 G23 O33 Q56 Q58 (search for similar items in EconPapers)
Date: 2024-10
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