Firm Climate Investment: A Glass Half-Full

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

doi:10.3386/w33081

Firm Climate Investment: A Glass Half-Full

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

Working Paper 33081

DOI 10.3386/w33081

Issue Date October 2024

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.

The authors would like to thank the Economic and Social Research Council for funding under grant ES/X013707/1. Any views expressed are solely those of the authors and so cannot be taken to represent those of the Bank of England or to state Bank of England policy. This paper should therefore not be reported as representing the views of the Bank of England or members of the Monetary Policy Committee, Financial Policy Committee, or Prudential Regulation Committee. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

Nicholas Bloom
I worked for McKinsey and company as a management consultant from 2001-2002. I have not received any funding from them after that time.

I am part of the Toulouse Network for Information Technology, which carries out research on IT and productivity. From this network I receive an annual honorarium, which is funded by Microsoft.

I do occasional consulting on management practices for government and policy agencies, like the Canadian Government, the World Bank, the European Union, the British Government, and the European Bank of Reconstruction and Development.

I produced a report in 2008 for the World Economic Forum on management practices in private equity for which I received an honorarium.

I am a paid speaker at corporate events at which I discuss among other things working from home, management practices and policy uncertainty.
MARC RIS BibTeΧ

Firm Climate Investment: A Glass Half-Full

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