Limits to Private Climate Change Mitigation

By Dalya Elmalt, Divya Kirti, Deniz O Igan

April 29, 2021

Preview Citation

Format: Chicago

Dalya Elmalt, Divya Kirti, and Deniz O Igan. Limits to Private Climate Change Mitigation, (USA: International Monetary Fund, 2021) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

As climate change looms larger, many look to sustainable investing that incorporates environmental, social, and governance (ESG) concerns as part of the way forward. To assess scope for ESG-conscious investing to achieve climate change goals, we explore the link between emissions growth and ESG scores using firm-level data for the largest emitters around the world. Discouragingly, our analysis uncovers at best a weak relationship: firms with better ESG scores do display somewhat slower emissions growth but this link is substantially attenuated and no longer statistically significant if we limit attention to within-country or within-firm variation. Our findings suggest limited scope for sustainable investing strategies conditioned solely on ESG indicators to meaningfully help mitigate climate change and, more broadly, underscore the need to continue to build consensus towards effective economy-wide policies to address climate change.

Subject: Climate change, Climate finance, Corporate social responsibility, Economic sectors, Environment, Greenhouse gas emissions

Keywords: Climate change, Climate change goal, Climate change mitigation, Climate finance, Corporate social responsibility, Emissions growth, ESG indicator, ESG score, Global, Greenhouse gas emissions

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/112
Stock No:

WPIEA2021112
ISBN:

9781513582504
ISSN:

1018-5941

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