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Institutional Investors, Climate Policy Risk, and Directed Innovation

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  • Marie-Theres von Schickfus

Abstract

The tightening of climate policies may cause technologies based on fossil fuels to lose value compared to “green” technologies. For firms with significant fossil-based knowledge, this implies that their firm (market) value is at risk. This technological risk is also relevant for financial market actors, in particular institutional investors following long-term investment strategies. Measuring technological knowledge using patent data at the firm level, this paper uses a dynamic patent count data model and explores whether institutional investors address technological transition risk via engagement activities. Despite robust evidence for a positive influence of institutional investors on overall innovation, no evidence can be found that institutional ownership is associated with a change in the direction of innovation.

Suggested Citation

  • Marie-Theres von Schickfus, 2021. "Institutional Investors, Climate Policy Risk, and Directed Innovation," ifo Working Paper Series 356, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_356
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    File URL: https://www.ifo.de/DocDL/wp-2021-356-vonschickfus-climate-policy-innovation.pdf
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    References listed on IDEAS

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    5. Sen, Suphi & von Schickfus, Marie-Theres, 2020. "Climate policy, stranded assets, and investors’ expectations," Journal of Environmental Economics and Management, Elsevier, vol. 100(C).
    6. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
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    Cited by:

    1. Dorsaf Azouz Ghachem & Nadia Basty & Qasim Zureigat, 2022. "Ownership Structure and Carbon Emissions of SMEs: Evidence from OECD Countries," Sustainability, MDPI, vol. 14(21), pages 1-16, November.

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    More about this item

    Keywords

    Green innovation; climate policy; green finance; climate risk; institutional investors;
    All these keywords.

    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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