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Green Firms, Environmental Hazards, and Investment

Author

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  • Tommaso Oliviero

    (The Money and Finance Research Group (MoFiR), Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II, 80126 Napoli, Italy)

  • Sandro Rondinella

    (Department of Economics and Statistics, University of Naples Federico II, 80126 Napoli, Italy)

  • Alberto Zazzaro

    (The Money and Finance Research Group (MoFiR), Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II, 80126 Napoli, Italy)

Abstract

In this work, we analyze the relation between environmental risks and firms’ investments, and whether this relationship is different for green firms. We merge balance sheet and patenting activity data on Italian firms in manufacturing sectors during the period 2010–2019 with information on environmental risk at the municipality level. We show that investments in capital assets are smaller on average for firms operating in municipalities with higher levels of environmental risk, particularly when the risk is hydrogeological or seismic in nature. This negative impact is significantly lower if firms operate in green sectors. This finding was reinforced after the ratification of the Paris Agreement and the consequent increased awareness of firms, investors, and policymakers about the importance of environmental risks and the ongoing ecological transition process.

Suggested Citation

  • Tommaso Oliviero & Sandro Rondinella & Alberto Zazzaro, 2024. "Green Firms, Environmental Hazards, and Investment," Sustainability, MDPI, vol. 16(2), pages 1-21, January.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:2:p:542-:d:1315284
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