IDEAS home Printed from https://ideas.repec.org/p/cbi/stafin/6-si-26.html

Climate and the Geography of Multinationals

Author

Listed:
  • Carbone, Sante

    (Central Bank of Ireland)

  • Hale, Galina

    (Central Bank of Ireland)

  • Beck, Roland

    (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.

Suggested Citation

  • Carbone, Sante & Hale, Galina & Beck, Roland, 2026. "Climate and the Geography of Multinationals," Central Bank Staff Insights 6/SI/26, Central Bank of Ireland.
    • Handle: RePEc:cbi:stafin:6/si/26
    as

    Download full text from publisher

    File URL: https://www.centralbank.ie/publication/research-publications/staff-insights/climate-and-the-geography-of-multinationals
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbi:stafin:6/si/26. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Fiona Farrelly (email available below). General contact details of provider: https://edirc.repec.org/data/cbigvie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.