We study the effect of financial deepening on carbon dioxide (CO2) emissions intensity in a global sample of 125 economies from 1990 to 2019. Using the local projections (LP) approach, we find that financial deepening leads to a relative increase in CO2 emissions intensity, indicating that financial institutions tend to finance relatively more carbon-intensive investments and consumption. However, we also find that a better institutional environment mitigates this adverse effect of financial deepening: conditional LPs reveal that in countries with more environmental regulations, a stronger rule of law, and a financial system that is relatively more market- than bank-based, financial deepening does not lead to higher CO2 emissions intensity. Furthermore, our results show that stronger rule of law and higher relative financial market development mitigate the effect of financial deepening in countries, which already have lower CO2 emissions intensity. By contrast, tighter environmental regulations are more effective in countries with an initially higher carbon intensity.

This policy paper explores Vietnam’s carbon transition through three distinct scenarios, each shaped by technological advancements, policy frameworks, market dynamics, and societal shifts. The Current Policies/Planned Policy Scenario envisions continued reliance on the existing framework, balancing economic growth through infrastructure investments with challenges like dependency on natural gas and limited financial resources. The Successful Carbon Market Scenario highlights the role of a robust carbon trading market, supported by strong Monitoring, Reporting, and Verification systems, to drive emissions reductions, clean energy innovation, and low-carbon investments, while addressing issues of market integrity and equitable benefits. The Subsidy-Driven Green Transition Scenario, inspired by the U.S. Inflation Reduction Act, focuses on government-led efforts leveraging fiscal spending, tax credits, and incentives to accelerate renewable energy adoption and low-carbon technologies. Together, these scenarios offer diverse pathways and potential macroeconomic impacts for Vietnam’s shift to a low-carbon future.

This paper investigates the effects that science-based targets (SBTs) have on corporate greenhouse gas (GHG) emissions. Using a difference-in-differences (DiD) methodology, we assess whether companies that commit to a Net Zero goal show a decrease in GHG emissions compared to similar companies that declare such goals later. Our results provide limited evidence that organizations with SBT reduce emissions, particularly for Scope 1 and Scope 2 emissions, as the findings lack strong statistical significance. We also examine whether the pace of emission reductions increases as companies approach their target year. Our results indicate that efforts to reduce emissions increase before the announcement, but may stabilize thereafter. These results highlight the challenges of accurately assessing the tangible impact of voluntary corporate commitments on climate goals and underscore the need for comprehensive and clear reporting to prevent misleading claims and promote confidence in climate finance.

We study the propagation of firms' Environmental, Social, and Governance (ESG) scores through director networks. Using detailed director-network data and a panel regression approach, we show that a firm's ESG ratings positively respond to those of its peer-director-connected firms. This transmission of ESG ratings through peer director networks differs from that through locality, industry, and interlocks. Firms are likelier to adopt ESG practices from peer-director firms that are financially successful or have influential boards, suggesting that value and values matter for ESG decisions. ESG adoption is also used strategically among competitors. A difference-in-differences approach provides additional evidence of the causal nature of this effect across diverse ESG dimensions.

This study is the first in the literature to examine the relationship between ESG scores and stock market performance of companies listed on the Qatar Stock Exchange (QSE). The paper constructs ESG score by reviewing 776 annual reports published in the period of 2002 to 2022. Ranks were assigned based on the frequency of ESG-friendly words found in the annual reports. Investment simulation strategies were then used to compare the stock returns of value-weighted and ESG-rank weighted portfolios against the QSE benchmark index. The results show that high ESG-ranked portfolios generate superior returns compared to both the value-weighted portfolio and market index both in terms of raw and risk adjusted returns. Additionally, Fama-French-Carhart (FFC) factors were constructed for Qatar, and the estimations revealed that the ESG portfolios produce positive alpha values. Overall, the findings suggest that the Qatar market participants prioritise ESG friendliness. The paper highlights the need to establish a comprehensive database of ESG scores for Qatari companies.

This paper presents a novel investigation by studying the role of supply chain network on firms’ environmental, social, and governance (ESG) scores, as well as on financial performance. Our analysis employs financial, board, ESG and supply chain data, making an unbalanced panel of over 16,000 firm-year observations from 3,028 publicly traded US firms, spanning fiscal years from 2005 to 2021. We use two different supply chain network proxies; namely the number of nodes and the eigenvector centrality, while we use various financial performance measures such as ROA, ROE, ROS, Tobin’s Q and Stock Returns. Building on Resource Dependence Theory, our results indicate that a larger supply chain network has a positive impact on ESG scores, while there is insufficient evidence to support a direct relationship between supply chain networks and financial performance. Interestingly, the impact of the supply chain on financial performance appears to

be indirect, through ESG. Important practical implications are also discussed.

This study examines the effect that text-based sustainability communication,

framed in ESG dimensions, has on investment-based crowdfunding

outcomes. Using an exclusive dataset provided by OneCrowd, operator

of two investment-based crowdfunding platforms in Germany, we apply a

machine learning algorithm (ESGBERT) to assess campaign descriptions.

Our results show that overall ESG scoring does not significantly impact

success metrics. However, communicating environmental aspects is associated

with faster funding success, more investors, and higher total capital

raised, whereas social aspects negatively affect these outcomes. We apply

survival analysis via a Cox proportional hazards model to investigate

time-to-success and use OLS regressions to explore the number of investors

and total capital. By employing a natural language processing approach,

our research provides comprehensive insights into the role of sustainability

communication in crowdfunding. We offer practical implications for

sustainable entrepreneurs and highlight potential directions for improving

the alignment between crowdfunding platforms and sustainable objectives.

Overall, these findings underscore the nuanced effects of ESG.