The ESG-Innovation Disconnect: Evidence from Green Patenting / Lauren Cohen, Umit G. Gurun, Quoc H. Nguyen.

Format:

Book

Author/Creator:

Cohen, Lauren.

Contributor:

National Bureau of Economic Research.

Gurun, Umit G.

Nguyen, Quoc H.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27990.

NBER working paper series no. w27990

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

No firm or sector of the global economy is untouched by innovation. In equilibrium, innovators will flock to (and innovation will occur where) the returns to innovative capital are the highest. In this paper, we document a strong empirical pattern in green patent production. Specifically, we find that oil, gas, and energy-producing firms - firms with lower Environmental, Social, and Governance (ESG) scores, and who are often explicitly excluded from ESG funds' investment universe - are key innovators in the United States' green patent landscape. These energy producers produce more, and significantly higher quality, green innovation. Our findings raise important questions as to whether the current exclusions of many ESG-focused policies - along with the increasing incidence of explicit divestiture campaigns - are optimal, or whether reward-based incentives would lead to more efficient innovative outcomes.

Notes:

Print version record

October 2020.