Conference Agenda
Please note that all times are shown in the time zone of the conference. The current conference time is: 15th Sept 2026, 08:44:01am CEST
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Daily Overview |
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SF 07: Sustainable Investment and Real Effects Location: LR M0.3 (Floor 0) Session Chair: Lin Peng, Baruch College | |
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ID: 1279
Capital Allocation, Operational Efficiency, and Emissions: The Real Effects of ESG Divestment 1: University of Virginia, Darden School, United States of America; 2: VU University Amsterdam; 3: University of Houston, Bauer We study the effect of ESG-induced divestment on access to financing, operating efficiency, and CO2 emissions for long-lived, capital intensive assets: U.S. power plants. Using a shift-share measure of firms’ exposure to banks’ coal divestment policies, we find that divestment leads to a reduction in debt supply and subsequently lower capital expenditure. We then trace out the full chain of real consequences of this financial shock. Using hourly operating data for all major U.S. power plants, we show that capital rationing causes operational inefficiencies in generator utilization, resulting in inefficiently high CO2 emissions. We show that policy choices play a major role in these unintended consequences. Exploiting the staggered introduction of emissions trading schemes, we show that, unlike ESG divestment, carbon pricing does not lead to inefficient asset utilization and excess CO2 emissions.
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