Climate and the Geography of Multinationals

Sante Carbone, Galina Hale and Roland Beck
Additional contact information
Sante Carbone: Central Bank of Ireland
Galina Hale: Central Bank of Ireland
Roland Beck: Central Bank of Ireland

No 6/SI/26, Central Bank Staff Insights from Central Bank of Ireland

Abstract: Multinational enterprises respond to more stringent climate policymaking by redirecting some of their manufacturing foreign direct investment (FDI). This reallocation is more pronounced in countries hosting affiliates in the most carbon-intensive segments of manufacturing. We study the transmission of an unexpected tightening in climate policy and find that multinationals expand affiliate assets in emerging markets, which are characterised by less stringent climate policies. These adjustments persist for up to four years. Pharmaceutical multinationals represent a notable exception to this pattern. Potentially owing to the large fixed costs and highly specialised production processes that characterise the sector, these firms do not meaningfully reallocate FDI in response to shifts in climate policy. In line with this finding, foreign-owned subsidiaries in Ireland do not exhibit a significant contraction in assets or employment when their parent companies abroad face higher climate policy costs.

Date: 2026-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.centralbank.ie/publication/research-pu ... hy-of-multinationals

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cbi:stafin:6/si/26

Access Statistics for this paper

More papers in Central Bank Staff Insights from Central Bank of Ireland Contact information at EDIRC.
Bibliographic data for series maintained by Fiona Farrelly ().