Work

Do analysts matter for green investment? Evidence from the EU taxonomy

Year: 2025

Type: article

Abstract: To mitigate climate warming, one critical strategy is to redirect corporate investments toward low-carbon projects. This study explores the role that financial analysts' focus on environmental issues can play in this process. The research leverages the implementation of the EU Taxonomy Regulation for publicly listed companies in France in 2022, which provides a comprehensive, precise, and standardized measure of corporate green investments. We use the measure of a firm's climate change exposure as a proxy for analysts' focus on green issues. We find such focus has a positive and significant effect on corporate green investments. In a further analysis, we also find that our main result is driven by analysts' focus on opportunities. This study offers new insights into how analyst scrutiny impacts ESG practices and highlights the potential contributions of the EU Taxonomy Regulation.

Source: Economics Letters

DOI: 10.1016/j.econlet.2025.112277

Authors: Grégoire Davrinche, Jean-Yves Filbien, Ludovic Vigneron

Institutions: TBS Education, Université de Lille

Language: English

Topic: Sustainable Finance and Green Bonds

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Climate action

Open Access status: hybrid

Estimated APC paid: $3,030