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Evaluating the carbon footprint of multinational enterprises in China: Does the source of FDI matter?

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  • Zhou, Yang
  • Wang, Ran
  • Li, Xiyuan
  • Meng, Bo

Abstract

Understanding how carbon footprint is distributed across multinational enterprises (MNEs) from different investment origins helps improve the governance of MNE-related emissions. We trace the direct and upstream indirect carbon emissions induced by the production of MNEs from different investment origins over the period 2007–2017. Our results reveal that more than half of MNEs' carbon footprint in China is linked to MNEs whose investment is registered in tax havens. The carbon footprint is unevenly distributed across provinces, being concentrated in eastern coastal regions, while resource-based and ecologically vulnerable provinces bear disproportionately large environmental burdens. The carbon footprint also varies markedly across sectors: MNEs from developed economies concentrate more of their carbon footprint in high-tech manufacturing sectors, UK-owned MNEs in medium-tech manufacturing sectors, and MNEs from Hong Kong, Macao and Taiwan in low-medium-tech manufacturing sectors. MNEs in the automobile manufacturing sector show greater proactivity in green supply chain practices and some leading firms have exhibited a pattern consistent with relative decoupling between carbon footprint growth and output growth. These findings provide empirical support for the design of differentiated mitigation policies targeting MNEs from different investment origins in China and thus contribute to the achievement of China's mitigation targets.

Suggested Citation

  • Zhou, Yang & Wang, Ran & Li, Xiyuan & Meng, Bo, 2026. "Evaluating the carbon footprint of multinational enterprises in China: Does the source of FDI matter?," Ecological Economics, Elsevier, vol. 248(C).
    • Handle: RePEc:eee:ecolec:v:248:y:2026:i:c:s0921800926001722
    DOI: 10.1016/j.ecolecon.2026.109087
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