Managerial and Financial Barriers to the Green Transition

Ralph De Haas (), Ralf Martin (), Mirabelle Muûls () and Helena Schweiger ()
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Ralph De Haas: European Bank for Reconstruction and Development, Office of the Chief Economist, London E14 4BG, United Kingdom; Centre for Economic Policy Research (CEPR), London EC1V ODS, United Kingdom; Faculty of Economics and Business, KU Leuven, 3000 Leuven, Belgium
Ralf Martin: Centre for Economic Policy Research (CEPR), London EC1V ODS, United Kingdom; Economics and Public Policy Department, Imperial College London, Business School, London SW7 2AZ United Kingdom; International Finance Corporation (IFC) (World Bank Group), Washington, District of Columbia 20433; Centre for Economic Performance (CEP), London School of Economics, London WC2A 2AE, United Kingdom
Mirabelle Muûls: Centre for Economic Policy Research (CEPR), London EC1V ODS, United Kingdom; Economics and Public Policy Department, Imperial College London, Business School, London SW7 2AZ United Kingdom; Centre for Economic Performance (CEP), London School of Economics, London WC2A 2AE, United Kingdom; National Bank of Belgium (NBB), 1000 Brussels, Belgium
Helena Schweiger: European Bank for Reconstruction and Development, Office of the Chief Economist, London E14 4BG, United Kingdom

Management Science, 2025, vol. 71, issue 4, 2890-2921

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 CO 2 and pollutants. A counterfactual analysis shows that credit constraints and weak management have respectively kept CO 2 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: green management; credit constraints; CO 2 emissions; energy efficiency (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:4:p:2890-2921

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