The ESG - Innovation Disconnect: Evidence from Green Patenting

86 Pages Posted: 11 Jan 2021 Last revised: 29 Feb 2024

See all articles by Lauren Cohen

Lauren Cohen

Harvard University - Business School (HBS); National Bureau of Economic Research (NBER)

Umit G. Gurun

University of Texas at Dallas

Quoc Nguyen

DePaul University

Multiple version iconThere are 2 versions of this paper

Date Written: February 25, 2024


No firm or sector of the global economy is untouched by innovation. In equilibrium, innovators will
flock to (and innovation will occur) where the returns to innovative capital are the highest. In this paper, we document a strong empirical pattern in green patent production. Specifically, we find that oil, gas, and energy-producing firms – firms with lower Environmental, Social, and Governance (ESG) scores, and who are often explicitly excluded from ESG funds’ investment universe – are key innovators in the United States’ green patent landscape. These energy producers produce more, and significantly higher quality, green innovation. In many green technology spaces, they appear to be influential first-movers, not easily substitutable, and to produce ongoing foundational aspects of innovation and commercialization on which other alternative energy producers build. This is broadly true across the green patenting spectrum, and continues through the present day, concentrating specifically in certain green technology branches (for instance, in carbon capture).

Keywords: ESG investment, green patents, innovation, energy sector, sustainable investing, ESG ratings, Fund flows.

JEL Classification: G11, G30, O31, O32

Suggested Citation

Cohen, Lauren and Gurun, Umit G. and Nguyen, Quoc, The ESG - Innovation Disconnect: Evidence from Green Patenting (February 25, 2024). European Corporate Governance Institute – Finance Working Paper No. 744/2021, Available at SSRN: or

Lauren Cohen

Harvard University - Business School (HBS) ( email )

Rock Center 321
Soldiers Field
Boston, MA 02163
United States


National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Umit G. Gurun (Contact Author)

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States


Quoc Nguyen

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics