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Socially responsible investing and multinationals' environmental harm: Evidence from global remote sensing data

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  • Gianinazzi, Virginia
  • Girard, Victoire
  • Lehlali, Mehdi
  • Prado, Melissa

Abstract

This paper examines the relationship between socially responsible institutional ownership and the environmental outcomes of multinational firms. We combine satellite-based measures of vegetation health, inversely correlated with industrial pollution, with institutional ownership data for 52,806 production facilities operated by 911 publicly listed multinationals across 124 countries. Exploiting within-firm variation over time, we find that increases in responsible ownership improve local environmental conditions. Quasi-experimental evidence from asset manager mergers confirms these findings. The effects are heterogeneous: environmental conditions improve around OECD-based facilities but deteriorate around non-OECD operations of the same firms, especially when ownership concentrates among high-engagement investors.

Suggested Citation

  • Gianinazzi, Virginia & Girard, Victoire & Lehlali, Mehdi & Prado, Melissa, 2024. "Socially responsible investing and multinationals' environmental harm: Evidence from global remote sensing data," CEPR Discussion Papers 19611, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19611
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    File URL: https://cepr.org/publications/DP19611
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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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