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Ecological preferences and the carbon intensity of corporate investment

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  • Koetter, Michael
  • Noth, Felix

Abstract

Lowering carbon intensity in manufacturing is necessary to transform current production technologies. We test if local agents' preferences, revealed by vote shares for the Green party during local elections in Germany, relate to the carbon intensity of investments in production technologies. Our sample comprises all investment choices made by manufacturing establishments from 2005-2017. Our results suggest that ecological preferences correlate with significantly fewer carbon-intensive investment projects while investments stimulating growth and reducing carbon emissions increase by 14 percentage points. Both results are more distinct in federal states where the Green Party enjoys political power and local ecological preferences are high.

Suggested Citation

  • Koetter, Michael & Noth, Felix, 2025. "Ecological preferences and the carbon intensity of corporate investment," IWH Discussion Papers 2/2025, Halle Institute for Economic Research (IWH).
    • Handle: RePEc:zbw:iwhdps:310322
    DOI: 10.18717/dp5wte-gm74
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    More about this item

    Keywords

    ecological preferences; elections; establishments' energy usage; investments;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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