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Firm Climate Investment: A Glass Half-Full

Author

Listed:
  • Prachi Srivastava
  • Nicholas Bloom
  • Philip Bunn
  • Paul Mizen
  • Gregory Thwaites
  • Ivan Yotzov

Abstract

We analyse the importance of climate-related investment using a large economy-wide survey of UK firms. Over half of firms expect climate change to have a positive impact on their investment in the medium term, with around a quarter expecting a large impact of over 10%. Around two-thirds of these investments are expected to be in addition to normal capital expenditure, with some firms investing less elsewhere. These investments will be driven by larger firms as well as those in more energy-intensive sectors. Climate investments are expected mainly in switching to green energy sources and improving energy efficiency, and firms expect to finance these mainly using internal cash reserves. Overall, although firms are expecting to invest more resources in adapting to climate change, under reasonable assumptions, these investments are still not sufficient to meet the estimated targets implied by the UK Net Zero Pathway.

Suggested Citation

  • Prachi Srivastava & Nicholas Bloom & Philip Bunn & Paul Mizen & Gregory Thwaites & Ivan Yotzov, 2024. "Firm Climate Investment: A Glass Half-Full," NBER Working Papers 33081, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33081
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    More about this item

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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