COP28 targets for mobilizing private investment in fossil fuels extraction industry to cope with the climate change

Gang Zhou, Gwonsoo Bahn, Jian Lao and Yuan Zhang

Resources Policy, 2024, vol. 97, issue C

Abstract: This study analyzes data from the Sovereign ESG Data Portal to assess how macroeconomic factors influence ESG (Environmental, Social, and Governance) investments in the fossil fuels extraction sector across G7 countries from 2005 to 2022. Using the PMG-ARDL technique, findings reveal that a 1% rise in income inequality leads to a 0.14% decrease in ESG investment in the short term and 0.43% in the long term. Conversely, a 1% increase in household spending on education results in a 0.12% short-term and 0.16% long-term boost in ESG investment. Economic growth does not significantly affect ESG investment, likely due to the sector's profit-driven nature. Additionally, a 1% increase in industry value decreases ESG investment, while better governance practices enhance it. The study suggests that policies focusing on improving governance, reducing inequality, and increasing education spending are crucial for promoting sustainable investments.

Keywords: Private investment in sustainable projects; Sustainability of fossil fuels extraction industry; ESG investment; G7; PMG-ARDL (search for similar items in EconPapers)
JEL-codes: C32 G11 G23 Q35 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:97:y:2024:i:c:s0301420724006524

DOI: 10.1016/j.resourpol.2024.105285

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