Exporting Pollution: Where Do Multinational Firms Emit CO2?

68 Pages Posted: 22 Sep 2018 Last revised: 7 Dec 2020

See all articles by Itzhak Ben-David

Itzhak Ben-David

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)

Yeejin Jang

UNSW Australia Business School, School of Banking and Finance

Stefanie Kleimeier

Maastricht University - Department of Finance; Open Universiteit; Univ. of Stellenbosch Business School

Michael Viehs

Oxford University Smith School of Enterprise and the Environment; European Centre for Corporate Engagement (ECCE)

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Date Written: November 30, 2020

Abstract

Despite widespread awareness of the detrimental impact of CO2 pollution on the world climate, countries vary widely in how they design and enforce environmental laws. Using novel microdata about multinational firms’ CO2 emissions across countries, we document that firms headquartered in countries with strict environmental policies perform their polluting activities abroad in countries with relatively weaker policies. These effects are largely driven by tightened environmental policies in home countries that incentivize firms to pollute abroad rather than lenient foreign policies that attract those firms. Although firms headquartered in countries with strict domestic environmental policies are more likely to export pollution to foreign countries, they nevertheless emit somewhat less overall CO2 globally.

Keywords: Pollution, Production, Climate Change, CO2 Emission, Environmental Regulation

JEL Classification: F23, N50, O13, P18, Q56, R11

Suggested Citation

Ben-David, Itzhak and Jang, Yeejin and Kleimeier, Stefanie and Viehs, Michael, Exporting Pollution: Where Do Multinational Firms Emit CO2? (November 30, 2020). Fisher College of Business Working Paper No. 2018-03-20, Charles A. Dice Working Paper No. 2018-20, European Corporate Governance Institute – Finance Working Paper 717/2020, Available at SSRN: https://ssrn.com/abstract=3252563 or http://dx.doi.org/10.2139/ssrn.3252563

Itzhak Ben-David (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

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National Bureau of Economic Research (NBER) ( email )

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HOME PAGE: http://fisher.osu.edu/fin/faculty/Ben-David/

Yeejin Jang

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

Stefanie Kleimeier

Maastricht University - Department of Finance ( email )

Maastricht, 6200 MD
Netherlands

Open Universiteit

Valkenburgerweg 177
Heerlen, 6419 AT
Netherlands

Univ. of Stellenbosch Business School

Carl Cronjé Drive
CAPE TOWN, Cape Town 7535
South Africa

Michael Viehs

Oxford University Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44-1865-614938 (Phone)

European Centre for Corporate Engagement (ECCE) ( email )

Tongersestraat 53
Maastricht, 6211LM
Netherlands

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