Out of Sight, Out of Mind: Divestments and the Global Reallocation of Pollutive Assets

64 Pages Posted: 28 Feb 2023 Last revised: 13 Nov 2024

See all articles by Tobias Berg

Tobias Berg

Goethe University Frankfurt; Centre for Economic Policy Research (CEPR); Leibniz Institute for Financial Research SAFE

Lin Ma

Halle Institute for Economic Research

Daniel Streitz

Halle Institute for Economic Research

Date Written: August 18, 2023

Abstract

We analyze firms' carbon reduction strategies worldwide and identify one key channel: large, primarily European firms facing increased investor pressure divest pollutive assets to firms that are less in the limelight. There is no evidence of increased engagement in other emission reduction activities. We estimate that 369 million metric tons (mt) of CO2e are reallocated via divestments in the post-Paris Agreement period, shifting pollutive assets from Europe to the rest of the world. Our results indicate significant global asset reallocation effects and imply that responsible investors who want to truly invest responsibly need to monitor firms’ divestment strategies closely.

Keywords: Investor Pressure, GHG Emissions, Asset Sales, Paris Agreement, Institutional Investors, Carbon Disclosure Project

JEL Classification: G30, G38, Q54, G15, G23, M14

Suggested Citation

Berg, Tobias and Ma, Lin and Streitz, Daniel, Out of Sight, Out of Mind: Divestments and the Global Reallocation of Pollutive Assets (August 18, 2023). SAFE Working Paper No. 436, Available at SSRN: https://ssrn.com/abstract=4368113 or http://dx.doi.org/10.2139/ssrn.4368113

Tobias Berg

Goethe University Frankfurt ( email )

House of Finance
Grueneburgplatz 1
Frankfurt am Main, Hessen 60323
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Leibniz Institute for Financial Research SAFE ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt, 60323
Germany

Lin Ma

Halle Institute for Economic Research ( email )

Daniel Streitz (Contact Author)

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

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

Paper statistics

Downloads
802
Abstract Views
2,183
Rank
64,820
PlumX Metrics