Firm Climate Investment: A Glass Half-Full

Prachi Srivastava, Nicholas Bloom, Philip Bunn, Paul Mizen, Gregory Thwaites and Ivan Yotzov

No 33081, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: C83 D22 D25 D84 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-ene and nep-env
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Working Paper: Firm climate investment: a glass half-full (2024)
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