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How Finance and Firms Can Accelerate the Green Transition

Author

Listed:
  • Ralph De Haas

    (EBRD, KU Leuven, CEPR)

Abstract

Access to bank credit and the quality of firms' management both play important roles in determining how much businesses invest in energy efficiency and pollution reduction. While credit constraints can hinder firms' ability to invest in capitalintensive clean technologies, such as machinery and vehicle upgrades, bad management practices often also pose a significant barrier. Firms with better green management practices - as measured by their environmental objectives, targets and monitoring systems - are more likely to invest in a wide range of green projects, from waste reduction and recycling to energy and water management. Based on a comprehensive survey of the recent literature, this article argues that policies aimed at facilitating access to green finance should be combined with initiatives to help business leaders become better green managers.

Suggested Citation

  • Ralph De Haas, 2024. "How Finance and Firms Can Accelerate the Green Transition," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 23(3), pages 5-17.
    • Handle: RePEc:mnb:finrev:v:23:y:2024:i:3:p:5-17
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    References listed on IDEAS

    as
    1. Schweiger, Helena & Stepanov, Alexander, 2022. "When good managers face bad incentives: Management quality and fuel intensity in the presence of price distortions," Energy Policy, Elsevier, vol. 164(C).
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    More about this item

    Keywords

    Carbon emissions; financial system; green finance; green innovation; banks; equity;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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