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Firm climate investment: a glass half-full

Author

Listed:
  • Prachi Srivastava

    (University College Dublin)

  • Nicholas Bloom

    (Stanford University)

  • Philip Bunn

    (Bank of England)

  • Paul Mizen

    (King’s College London)

  • Gregory Thwaites

    (University of Nottingham)

  • Ivan Yotzov

    (Bank of England)

Abstract

We analyse the importance of climate‑related investment using a large economy‑wide survey of UK firms. Over half of firms expect climate change to have a positive impact on their investment in the medium term, with around a quarter expecting a large impact of over 10%. Around two thirds of these investments are expected to be in addition to normal capital expenditure, with some firms investing less elsewhere. Climate investments are expected mainly in switching to green energy sources and improving energy efficiency, and firms expect to finance these mainly using internal cash reserves. Climate investment will be driven by larger firms as well as those in more energy‑intensive sectors. Although firms are expecting to invest more resources in adapting to climate change, under reasonable assumptions, these investments are still not sufficient to meet the estimated targets implied by the UK Net Zero Pathway.

Suggested Citation

  • Prachi Srivastava & Nicholas Bloom & Philip Bunn & Paul Mizen & Gregory Thwaites & Ivan Yotzov, 2024. "Firm climate investment: a glass half-full," Bank of England working papers 1095, Bank of England.
    • Handle: RePEc:boe:boeewp:1095
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    References listed on IDEAS

    as
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    Cited by:

    1. Svetlana Popova & Natalia Turdyeva, 2024. "Environmental and Climate Factors of Corporate Lending in Russia," Bank of Russia Working Paper Series wps143, Bank of Russia.

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    Keywords

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    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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