Green Investment Research Articles

Sowing the seeds of sustainability: how does green finance reform shape corporate ESG performance?

ABSTRACT In the context of rising global eco-concern, China introduced the green finance reform and innovation (GFRIs) policies to promote sustainable growth, rendering corporate ESG performance increasingly salient. This study evaluates the impact of GFRIs policies on ESG performance of Chinese listed firms from 2015 to 2022, and delves into the mechanisms of green investments, green innovation, and government environmental concern. By employing a dynamic difference-in-differences model and considering firms in GFRIs pilot zones as the treatment group, we find that: First, green finance reform can significantly enhance corporate ESG performance, and this result remains robust across various tests. Second, the impact is more pronounced among growth-stage firms, private firms, and small-scale firms, as revealed by our heterogeneity analysis. Third, the mechanism tests show that green finance reform improves corporate ESG performance by boosting green investments, fostering green innovation, and heightening local government environmental concerns. Fourth, firm executives’ attributes influence the impact of green finance reform on ESG performance, and the involvement of CPC member executives, female executives, and socially-responsible executives can positively moderate this effect. This study provides valuable insights into sound green finance strategies for developing countries by highlighting the positive impacts of green finance reforms on microeconomic outcomes.

Do green investments impact corporate green innovation?empirical evidence from Chinese-listed companies

The rapid expansion of the global economy has exacerbated environmental concerns, thereby prompting a shift in resource allocation from polluting industries to green sectors. This transition is pivotal for sustainable development, with capital playing a central role in mobilizing resources to foster green innovation. This study examines data from Chinese-listed companies between 2012 and 2022 to evaluate the impact of green investment on corporate green innovation. The analysis incorporates a comprehensive review of financial records and innovation metrics to establish a correlation between investment and innovation outcomes. The findings reveal a positive correlation between increased green investment and enhanced green innovation, with a more pronounced effect observed in private enterprises and industries characterized by high competition. Green investment primarily stimulates innovation by alleviating financial constraints. These results emphasize the crucial role of green investment in promoting sustainable corporate practices. Furthermore, they provide valuable insights for policymakers in formulating effective green investment strategies, which are essential for China’s transition toward a green economy.

Green degree decision and pricing strategy of dual-channel supply chains

With the prevalence of green supply chains, the government has basic requirements for companies’ green investments and outcomes while consumers increasingly favor green products. Thus, green degree decision has garnered significant attention from manufacturers. This paper incorporates green degree decisions into a dual-channel supply chain and adopts a Stackelberg model to analyze the green degree and pricing strategies under centralized and decentralized decisions. We find that, when the manufacturer only decides on price, dual-channel choice is always the optimal strategy under centralized decision-making; however, under decentralized decision-making, the dual-channel choice will be chosen only when the wholesale price is low. Considering green degree decision, both direct and indirect channel prices increase with the green degree, and the indirect channel price is more sensitive to changes in the green degree under centralized decision-making; and higher green degrees are always advantageous for the retailer, but the manufacturer’s profit initially decreases and then increases as the green degree rises under decentralized decision-making. Moreover, the wholesale price is used as a strategic tool for the manufacturer to control the distribution channel, particularly when the green degree is not introduced, the manufacturer can always ensure the introduction of dual channels. Besides, higher consumers’ environmental awareness is always beneficial to channel members, as it promotes channel prices and green degree. This study provides strategic insights for optimizing pricing and green degree decisions in dual-channel supply chains to achieve better economic and environmental outcomes.

How environmental policy stringency, green investment, and renewable energy contribute to environmental pollution and load capacity factor in G11 countries?

AbstractAmid growing concerns about global environmental sustainability, the focus on understanding the interplay between environmental policies, investments in sustainable practices, and renewable energy sources has intensified. This study delves into the relationship between environmental policy stringency, green investment, and the utilization of renewable energy, specifically examining their impact on the load capacity factor (LCF) within G11 countries utilized from 2000 to 2021. Manifestly, LCF integrates both demand‐ and supply‐side aspects of environmental quality. It also utilizes a comprehensive indicator of environmental policy stringency, evaluating its impact alongside green investment. Employing the Cross Sectional‐Augmented Autoregressive Distributed Lag (CS‐ARDL) model and the Common Correlated Effect Mean Group (CCEMG) approach, this research demonstrates that environmental policy stringency, green investment, and renewable energy consumption positively and significantly influence the LCF, consequently fostering improvements in environmental sustainability in both short‐ and long‐term scenarios. It is worth mentioning that environmental policy stringency has the strongest effects on LCF followed by renewable energy. The findings strongly indicate that reinforcing environmental policies, promoting green investment, and embracing renewable energy usage can collectively yield a substantial reduction in environmental pressure for G11 countries.

Retraction: Factors affecting the green investment and assessing sustainable performance of firms in China.

Retraction: Factors affecting the green investment and assessing sustainable performance of firms in China.

Forging a path to sustainability: the impact of Fintech on corporate ESG performance

Emerging development of Fintech has raised widespread attention to its important role in shaping corporate ESG performance despite little in-depth research. We study the impact of Fintech on corporate ESG performance using a comprehensive dataset covering major China’s firms over the past decade. The Fintech development at the city level is measured via an entropy method based on information gathering from firms and households. Drawn on a panel data estimation with two-way fixed effects, our findings show that corporate ESG performance improves with Fintech development. Promotion of green innovation, mitigation of financial mismatch, and environmental uncertainty are found to serve as the three mediating channels that drive the relationship between Fintech and corporate ESG performance. The positive impact of Fintech is shown to be more pronounced in firms with non-high-tech, non-high-polluting, and labor-intensive features. Further analysis indicates that Fintech strengthens in the enterprises’ green value through perspectives of green total factor productivity and green investment.

Does Greenium Exist? A Comparison between Sovereign and Corporate Bonds

Recent studies suggest that people when making investment decisions, evaluate risk according to their perception of eco-friendly commitment. These studies claim that preference to green investment influences prices and trading behaviour in market settings. Assets perceived greener on average trade at significantly higher prices with different performance between sovereign and corporate green bonds (Ehlers and Packer, 2017). Our paper refers to a sample of 5996 bond at world level divided equally in ordinary bond and green bonds. We tested a set of models to assess this new factor. The results confirm the presence of greenium, but it highlights that corporate bonds’ greenium is higher than sovereign one. Moreover, in developed markets, green bonds tend to exhibit characteristics of a greenium, whereas, in emerging markets, the environmental aspect is still developing. This observation supports the notion that greenium is more pronounced in mature markets with heightened environmental sensitivity. Differently from previous studies, we filter the model for bonds issued during the Covid19 pandemic and not, and the results suggests the presence of a greenium only in normal times (Zerbib, 2019a, 2019b). The analysis contributes to the research on the green bond market and its dynamics. We prove that greenium is not universally present or significant, especially in emerging markets. These insights are relevant for investors and policymakers considering the implications of green finance for sustainable development and climate change mitigation.

Mineral resource dependence and green transformation: the impact and challenges of green finance in Chinese cities

Overcoming the resource curse while balancing environmental protection and economic growth presents significant challenges. We developed an evaluation system to measure the green economic efficiency (GEE) of 262 cities and introduced the concept of the mineral resource curse. This study investigates both linear and non-linear relationships between mineral resource dependence (MRD) and GEE, as well as the role of green finance in this context. To address the endogeneity issue arising from the bidirectional causality between MRD and GEE, we used the interaction of relief degree of land surface and time as instrumental variables (IV). The empirical results indicate that a city’s MRD significantly inhibits GEE. Specifically, an increase in MRD hinders GEE by reducing green investment and crowding out green credit. By categorizing cities according to resource cycle theory, we found that non-resource-based and regenerative cities effectively avoided the mineral resource curse. However, resource-based, growing, mature, and declining cities did not benefit from their mineral resources. This conclusion remains robust even after changing IV and using various estimation methods such as IVTOBIT. Furthermore, this study discusses the practical effects of green finance. We found that green investment has a limited impact, failing to offset the negative influence of MRD on GEE. Under the influence of green credit, the relationship between MRD and GEE exhibits an inverted U-shape. This finding highlights the limitations of green finance policies at the municipal level in China. Overall, this study provides new evidence for improving China’s green finance system and promoting green economic development. It offers a fresh perspective for China and other developing countries in their green transformation efforts and avoidance of the mineral resource curse.

Evaluating the advancement of sustainable development objectives in recently industrialized nations by tying gold prices, fossil fuel prices, and energy use

Rapid industrialization in recently industrialized countries (NICs) has exacerbated environmental degradation, raising urgent concerns about how energy consumption, gold prices, and fossil fuel prices contribute to this growing issue. This study aims to evaluate the asymmetric relationships between these factors and environmental degradation across 10 NICs, including Brazil, India, South Korea, Mexico, Indonesia, Turkey, Thailand, South Africa, Malaysia, and the Philippines, from 1995 to 2023. Using the CS-ARDL model, our study demonstrates that while energy costs and renewable energy consumption reduce environmental degradation, gold prices and fossil fuel consumption significantly increase ecological harm. Additionally, the study employs FGLS, CS-DL, AMG, and Driscoll-Kray to verify the robustness of these findings. Notably, the Environmental Kuznets Curve (EKC) hypothesis holds true in these economies. Key results show that a 1 % increase in renewable energy use decreases emissions by 0.7 %, while a 1 % rise in gold prices correlates with a 0.5 % increase in pollution levels. These findings underscore the need for NICs to implement green investments, promote renewable energy, and initiate structural reforms to ensure sustainable development.

Islamic Finance and Environmental Sustainability: Empirical Insight from OIC Countries

Environmental degradation remains a significant global challenge, particularly in the Organization of Islamic Cooperation (OIC) countries. This study primarily examines the impact of Islamic finance, proxied by two indicators, namely Islamic financial assets and Islamic banking financing, and other variables including Gross Domestic Product (GDP), Foreign Direct Investment (FDI), urbanization, renewable energy adoption, and forest area, on CO2 emissions. This study revealed that Islamic financial assets had a negative impact on CO2 emissions, highlighting their importance in supporting green investments and sustainability. However, Islamic banking financing has little influence on emissions reduction, most likely due to carbon-intensive initiatives. Furthermore, GDP growth increases emissions, although FDI, urbanization, and forest areas help to lower them. These findings underscore Islamic finance's critical role in fostering sustainable development, as well as the necessity for better green Islamic financing policies in OIC member nations. The findings also provide important insights for policymakers working to balance economic growth with environmental sustainability in Islamic finance.

Measuring Global FDI-Embodied Carbon Emissions

ABSTRACT Foreign direct investment (FDI) significantly impacts global carbon emission patterns through the production and supply chains of transnational corporations (TNCs), influencing climate change governance. This study measures FDI-embodied carbon emissions from 2000 to 2019, using multi-regional input-output and hypothetical extraction methods, and analyzes changes via complex network analysis. Findings reveal a 61% increase in global FDI-embodied carbon emissions, with an upward trend since 2016, mainly due to developing countries. The 2008 financial crisis and Copenhagen Accord shifted carbon flows from concentrated to decentralized patterns. Clustering of these flows continues to rise. Strengthened international cooperation and guidelines are needed to promote green investment, guide TNCs, and achieve the Paris Agreement goals.

Environmental Policies and Green Technologies: Impacts on Energy Sustainability in the African Continental Free Trade Area.

This research focuses on environmental pollution, a significant concern today due to energy use. Improving ecological sustainability suggests a framework for sustainable energy behaviours. This paper reviews the advances in environmental policies and green technology in designing efficient energy systems, but some gaps remain. The variables considered in this research are analyzed through Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) models to determine their effects on energy structures and the environment in 31 of the 55 countries within the AFCFTA. Some main results show that one percentage point improvement in environmental legislation leads to decreased ecological footprints by 9.11% (DOLS) and 20.98% (FMOLS). On the other hand, a one percent increase in green innovations reduces ecological footprints by 0.6% (DOLS) and 1% (FMOLS). Also, service imports reduce sustainability by decreasing it by 2.98% (DOLS) and 1.47% (FMOLS), while service exports improve sustainability by increasing it by 1.59% (DOLS) and 1. 09% (FMOLS). Thus, these results underscore the need to maintain and strengthen environmental legislation and encourage green investments, as well as the importance of green innovation environmental policies and renewable energy to enhance environmental quality.

How might the implementation of a Sustainability Policy influencethe resilience of economic growth A Case of EU Taxonomy for SustainableActivities in Germany, Spain, and Italy

This paper examines how Sustainability Policy influences the resilience of economic growth in Germany, Spain, and Italy. By analyzing the Gross Domestic Product from 20217 to 2022, this paper finds that the three countries experienced economic growth after the pandemic. However, they have economic growth resilience of due to the amount of green investment in small and medium enterprises. The more enterprises and investments in the country, the more economic strength there is to resist the challenges of COVID-19 while contributing to the economic recovery. Interestingly, the analysis finds that policy synergies are linked to the strength of economic growth. This study emphasizes that governments need to align their policies with the EU Taxonomy to ensure their economic growth is both resilient and sustainable.

A sustainable fuzzy economic production quantity model (SFEPQM) with sporadic machine failures, inspection and prepayments under carbon tax and cap policy

Goals for sustainability have caused an upcoming change in the emphasis of Economic Production Quantity models, which was previously limited mainly to financial considerations to include aspects of the environment as well. The primary tools used in many nations to reduce emissions are carbon cap and price legislation. However, companies in the production industry may have difficulties with their planning and oversight procedures as they frequently have to cope with faulty products and machinery failures. Previous research has not addressed the comprehensiveness of green investment in machine breakdowns. Considering this problem, we have developed a sustainable economic production quantity model with sporadic malfunctions of machinery and prepayments under carbon tax and cap regulations. Our aim is to minimise the overall cost of faulty items with the investment in green technologies. An approach that combines with the outstanding effectiveness of green strategies to minimise emissions will culminate in a greener production that generates more profit than the traditional system. This study considers two cases i.e. with and without green technology investment (GTI). It also has many predictions, including the execution of inspections afterwards as well as during manufacturing, faulty goods are scrapped while others are sold at discounted price.

Investing in green, sustaining the planet: The role of fintech in promoting corporate green investment in the Chinese energy industry

In recent years, fintech has rapidly developed on a global scale, bringing about significant transformations across various industries. Particularly in the energy sector, the potential of fintech to promote corporate green investment has increasingly become a focus. As the energy industry accounts for a significant proportion of global greenhouse gas emissions, guiding companies in implementing green investment has become an important issue for environmental protection and sustainable development. However, previous studies have rarely systematically investigated the influence of fintech on corporate green investment in the energy industry and the mechanisms involved. Hence, this study aims to bridge this research gap within the context of China. By utilizing valid survey data from 466 corporations in the Chinese energy industry and the method of structural equation modeling, the results indicate that: (1) Fintech can promote corporate green investment in the energy industry. (2) Fintech can promote corporate data-driven decision-making capability, information transparency, and sustainable development strategy. (3) Data-driven decision-making capability, information transparency, and sustainable development strategy can also promote corporate green investment in the energy industry. (4) Mediation analysis reveals that data-driven decision-making capability, information transparency, and sustainable development strategy each play a mediating role in the impact of fintech on corporate green investment. (5) Comparative analysis of the mediation effects indicates that there is a certain degree of difference among these three variables’ mediating effects, but it did not reach a statistically significant level. This study provides rich insights for business practices, encouraging companies to strengthen their focus on green investment in the fintech era and offer guidance and recommendations to relevant stakeholders, thereby providing practical guidance for corporate green transformation and sustainable development. Finally, this research also contributes to policy development and optimization.

Retraction Note: The convergence of digital finance and green investments: opportunities, risks, energy transitions and regulatory considerations

Retraction Note: The convergence of digital finance and green investments: opportunities, risks, energy transitions and regulatory considerations

Green bond premium diagnosis: An interplay of repayment obligation structure

This paper examines at-issuance yield (price) differential between green and non-green bonds. The paper also checks the sensitiveness of the differentials to the repayment obligation structure of the bonds. For this, we test for differentials in the standard and revenue segments separately. From Bloomberg®, we extract US municipal green bonds from 2014 to 2023 and apply propensity score matching to generate sample sets comprising 26440, 23848, and 11702 bonds. Through univariate tests and OLS linear regression, we document lower yield for green bonds compared to non-greens (i.e., negative yield differential implying the existence of green premium) ranging from 2.7 to 6.9 basis points, implying cost savings to green issuers. The results are robust to alternate measuring variable and surrogate matched samples—the premiums decline in a non-pro-environmental regime and the pandemic. Green investors perceive higher risk in counties with higher pollution index. The premiums enlarge in the standard segment compared to revenue because of greater trust in the recourse feature than revenue stream collaterals. Citing the lack of tangible municipal revenue streams in emerging economies, our findings endorse the standard (general obligation) green bonds to raise finance at initial stages and create revenue-generating infrastructures.

THEORETICAL ASPECTS OF GREEN FINANCING FOR PROVIDING SUSTAINABLE DEVELOPMENT

This article explores the theoretical foundations of green finance as a crucial tool for achieving sustainable development goals. Green finance supports environmentally friendly initiatives and projects that align with sustainability principles, particularly by providing funding for low-carbon projects and environmentally sound technologies. The article delves into the conceptual frameworks that underpin green finance and examines its connections with the economic, social, and environmental dimensions of sustainable development. It emphasizes the role that green finance plays in balancing economic growth with environmental stewardship and social well-being, thus contributing to a more sustainable global economy. The key instruments of green finance, including green bonds, sustainability-focused investment funds, and responsible financing mechanisms, are thoroughly analyzed to understand their significance in promoting sustainable economic growth. These tools not only facilitate the funding of eco-friendly projects but also help shift financial markets toward more responsible practices. In this context, the article emphasizes the pivotal role played by international financial institutions, governments, and the private sector in driving green investments and fostering an economy that is conscious of its environmental impact. Particular attention is given to policy frameworks and regulatory measures that can create favorable conditions for the expansion of green finance, such as tax incentives, subsidies, and environmental regulations that encourage sustainable investment. Moreover, the article addresses the challenges impeding the development of green finance. These challenges include scalability issues, market regulation difficulties, and the need for increased international cooperation. Overcoming these obstacles is essential to unlock the full potential of green finance and ensure that it can contribute effectively to global efforts in combating climate change. The article also explores the future prospects of green finance within the broader context of transitioning toward more sustainable economic models and identifies opportunities for innovation and growth in this sector. Finally, the article highlights international strategies and showcases successful examples of green projects from different countries around the world. These case studies provide insight into the positive impacts of green finance on economic stability and the reduction of carbon emissions, offering a clearer understanding of how green finance can play a central role in fostering long-term sustainability on a global scale.

Exploring the impact of economic and environmental target constraints on and the green investment efficiency of firms: The moderating role of anti-corruption

As the main body of economic activity and technological innovation, enterprises’ investment motivation and efficiency in environmental protection directly affect the process of national green development. Based on data from A-share listed firms from 2012 to 2021, this study investigates the impact of economic and environmental targets set by local governments on the green investment efficiency of firms and the moderating role of anti-corruption. Our findings suggest that economic growth target constraints inhibit the green investment efficiency of firms and that environmental target constraints facilitate the green investment efficiency of firms. Anti-corruption weakens the negative relationship between economic growth target constraints and the green investment efficiency of firms, and strengthens positive relationship between environmental target constraints and the green investment efficiency of firms. In the heterogeneity tests, we find that these relationships are influenced by the region and intensity of the target constraints. The results are consistent with a series of robustness checks. This study is helpful for understanding how government policies and the political environment affect the green investment behavior of enterprises.

Inquisitive exploration of green finance, social finance, and capital formation in shaping economic development: insights from BRICS Countries

The significance of democratic commitment is highlighted on a global scale by the importance placed on offering a multitude of chances to establish enduring ecosystems and foster economic progress. Social finance, capital formation, and green finance have recently received a lot of attention from this perspective. Past studies mainly examined social finance and green finance in isolation. When investigating the individual impact of these important variables on economic growth in the occurrence of important events like the COVID-19 pandemic and other environmental pollution issues, most studies have mainly focused on developed countries, ultimately ignoring the different dynamics in emerging economies. The purpose of the research is to investigate the joint interaction between social finance (Social Impact Bonds), capital formation, and green finance (green loans, green investments, and green security) on economic development in BRICS economies. This research employed a longitudinal dataset from 2013 to 2023. The generalized method of moments (GMM) and fixed effect model (FEM) were employed in this research as statistical techniques for estimating parameters. The findings of this study revealed a positive joint relationship between green finance, capital formation, and social financing on economic development of BRICS economies. Therefore, measures that jointly promote social and green finance amidst environmental challenges or economic risks could present opportunities to mitigate the vulnerability of a country's economic prosperity. This research will surely guide policymakers in developing economies on how to give considerable attention to sustainable aspects while formulating policies and strategies aimed at economic development.