Carbon Home Bias of European Investors

62 Pages Posted: 15 Jul 2020 Last revised: 9 Nov 2023

See all articles by Martijn Adriaan Boermans

Martijn Adriaan Boermans

De Nederlandsche Bank

Rients Galema

Utrecht University - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 19, 2023


We investigate the extent to which investors exhibit carbon home bias: disproportionate investment in carbon-intensive firms from the home market. We utilize a comprehensive stock-level holdings dataset of European investors to understand the relationship between carbon home bias, divestment and disclosure. We show that investors exhibit significant carbon home bias, with about half of their carbon footprint stemming from their domestic investments. Over our sample period 2013-2022, European investors are decarbonizing their portfolios, although carbon home bias remains substantial. Differences-in-differences analyses show that a shock inducing institutional investors to decarbonize is associated with higher ownership of domestic carbon-intensive stocks. Consistent with engagement, higher domestic ownership of carbon-intensive stocks is associated with lower carbon emissions and a higher likelihood of carbon disclosure. Our results show that carbon home bias is not driven by differential home-foreign carbon risk premia, but instead suggest that investors combine divestment with successful engagement with carbon-intensive firms at home.

Keywords: home bias, carbon footprint, divestment, securities holdings statistics

JEL Classification: G11, G15, G23, H55, Q54, Q56

Suggested Citation

Boermans, Martijn Adriaan and Galema, Rients, Carbon Home Bias of European Investors (April 19, 2023). Available at SSRN: or

Martijn Adriaan Boermans (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB

Rients Galema

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC

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