{"id":69189,"date":"2021-03-12T10:00:54","date_gmt":"2021-03-12T09:00:54","guid":{"rendered":"https:\/\/www.sonnenseite.com\/?p=69189"},"modified":"2021-03-12T10:00:55","modified_gmt":"2021-03-12T09:00:55","slug":"strict-environmental-laws-push-firms-to-pollute-elsewhere","status":"publish","type":"post","link":"https:\/\/www.sonnenseite.com\/en\/economy\/strict-environmental-laws-push-firms-to-pollute-elsewhere\/","title":{"rendered":"Strict environmental laws \u2018push\u2019 firms to pollute elsewhere"},"content":{"rendered":"\n

Study highlights need for global cooperation on policies<\/p>\n\n\n\n

Multinational companies headquartered in countries with tougher environmental policies tend to locate their polluting factories in countries with more lax regulations, a new study finds.<\/p>\n\n\n\n

While countries may hope their regulations will reduce emissions of carbon dioxide and other greenhouse gases, these results show that these policies can lead to \u201ccarbon leakage\u201d to other nations, said Itzhak Ben-David<\/a>, co-author of the study and professor of finance<\/a> at The Ohio State University\u2019s Fisher College of Business<\/a>.<\/p>\n\n\n\n

\u201cFirms decide strategically where to locate their production based on existing environmental policies, with the result being that they pollute more in countries with lenient regulations,\u201d Ben David said. <\/p>\n\n\n\n

\u201cThis highlights the importance of worldwide collective action to combat climate change, given the global scale of firms\u2019 operations.\u201d<\/p>\n\n\n\n

The study was published online recently in the journal Economic Policy<\/em><\/a>.<\/p>\n\n\n\n

Researchers used a novel dataset covering 1,970 large public firms headquartered in 48 countries and their carbon dioxide emissions in 218 countries from 2008 to 2015. The database was provided by CDP<\/a>, a nonprofit formerly known as the Carbon Disclosure Project.<\/p>\n\n\n\n

\u201cWhat makes this dataset unique is that we can observe the carbon dioxide emissions of each multinational firm in each country in which it operates,\u201d Ben-David said.<\/p>\n\n\n\n

\u201cThis provides direct evidence of the effect of environmental policies and each firm\u2019s actual carbon dioxide emissions at the country level.\u201d<\/p>\n\n\n\n

The researchers also used rankings from the World Economic Forum<\/a> that rated the strength of each country\u2019s environmental policies on a scale of 1 (worst) to 7 (best).<\/p>\n\n\n\n

The results of the new study don\u2019t mean that tougher environmental regulations have no effect at all on global emissions, Ben-David said. Findings suggest that stringent policies are still associated with a partial, but positive, impact on reducing overall global pollution.<\/p>\n\n\n\n

For example, an increase in the environmental policy score from China (2.1, suggesting weak regulations) to Germany (5.5, stronger regulations) is associated with 44% lower global emissions.<\/p>\n\n\n\n

But it is also associated with a 299% increase in foreign emissions when compared to the companies\u2019 home countries.<\/p>\n\n\n\n

\u201cIf you make it more difficult to pollute in a company\u2019s home country, firms will move some of that pollution activity to somewhere else,\u201d Ben-David said.<\/p>\n\n\n\n

The study examined whether stricter policies \u201cpushed\u201d firms to pollute elsewhere or lax regulations \u201cpulled\u201d firms to countries where it was easier to pollute.<\/p>\n\n\n\n

\u201cWe found that the results were primarily driven by the environmental policies in the home country, rather than by opportunities to pollute elsewhere,\u201d he said. \u201cIt was more of a \u2018push\u2019 effect than a \u2018pull\u2019 effect.\u201d<\/p>\n\n\n\n

Not surprisingly, firms in the most polluting industries were the ones most likely to respond to strict policies in their home countries by locating their pollution activities elsewhere.<\/p>\n\n\n\n

Overall, most carbon dioxide is released in an average company\u2019s home country, but the share of home emissions declined substantially over time from 72% in 2008 to 57% in 2015, the researchers found.<\/p>\n\n\n\n

In addition, the number of countries in which the average firm polluted increased from six to nine during the period of the study.<\/p>\n\n\n\n

\u201cEnvironmental regulations in each country do work to somewhat reduce global emissions of carbon dioxide, but they also have this negative side effect of pushing pollution to other countries,\u201d Ben-David said.<\/p>\n\n\n\n

\u201cCountries need to collaborate if they really want environmental policies to have the strongest impact.\u201d<\/p>\n\n\n\n

Co-authors on the study are Yeejin Jang of the University of South Wales; Stefanie Kleimeier of Maastricht University, Open University and University of Stellenbosch; and Michael Viehs of the European Center for Sustainable Finance and Federated Hermes International.<\/p>\n\n\n

Source<\/h5>\r\n\n\n\n

OHIO STATE NEWS \/ Jeff Grabmeier 2021<\/a><\/p>\n

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