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Carbon transition risks and corporate investment

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  • Zhang, Wenzhe
  • Qin, Xinyi
  • He, Feng
  • Kong, Dongmin

Abstract

This study investigates how carbon transition risks influence micro investment behaviors. We find that carbon transition risks have a positive effect on firm's investments. Specifically, a firm's investment strategy is influenced not only by its direct carbon emissions but also by its indirect emissions through the supply chains. Moreover, both long-term and short-term carbon transition risks affect the firm's investment behaviors. The plausible mechanisms involve technological improvement and resource reallocation adjustment. The influence of carbon transition risks on firms' investments are more pronounced in brown industries and richer regions, and it holds for both state-owned and private enterprises.

Suggested Citation

  • Zhang, Wenzhe & Qin, Xinyi & He, Feng & Kong, Dongmin, 2025. "Carbon transition risks and corporate investment," Energy Economics, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:eneeco:v:152:y:2025:i:c:s0140988325008278
    DOI: 10.1016/j.eneco.2025.108997
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