Why do Brown Firms Lobby for Green Policies? The Role of Green Innovation

Abstract

I explore why many high-carbon-emitting Brown firms lobby for pro-environmental policies. Using U.S. federal lobbying reports and the patent assignment database, I propose that green innovation plays a key role in this behavior. In the absence of explicit environmental lobbying direction in the lobbying reports, I use lobbyists' ideological preferences to infer the direction. I find that while Brown firms generally lobby against pro-environmental policies, those with more and higher-quality green innovation outputs also lobby to support these policies. This relationship is stronger for Brown firms that rely more on intangible capital. Overall, the results suggest that Brown firms support green transition when they anticipate the future value of their green innovation output.

Keywords: corporate lobbying, environmental policy, innovation

JEL Classification: D72, G38, O31, Q58