| dc.description.abstract | The purpose of the thesis is to investigate whether the current momentum of responsible
investment approaches, hereunder the increasing adoption of excluding energy firms from
investment portfolios, is the most efficient strategy for financing the clean energy transition.
We investigate the green innovation efforts of the 250 largest European firms, divided into 12
sectors, by analyzing patent applications from 2000 to 2018. Concretely, we run pooled OLS
regressions with year fixed effects to analyze sector differences in the relative efforts to
produce green innovation, and the related innovation quality.
Our findings suggest that energy firms produce relatively more green innovation, and that this
innovation is of equal, or higher, quality than the innovation produced by firms in other
sectors. Our discoveries also suggest that energy firms have a higher focus on innovation
within renewables and carbon capture and storage. Moreover, we find that the innovation
efforts of the three sectors with most green patents are less directed towards green technologies
and of significantly lower quality than other sectors, including the energy sector. Conclusively,
energy firms are considered important contributors and enablers of the green transition.
Based on the empirical findings, we discuss the implications of excluding energy firms from
investment portfolios. The strategy may impose higher cost of capital on firms that play a
significant role in the green transition. Additionally, by pulling capital out of these firms, less
responsible investors may invest and encourage the structural important energy firms to
continue with carbon-intensive operations. Consequently, the energy firms may end up
increasing their levels of greenhouse gas emissions instead of developing new, cleaner
technologies. We therefore encourage responsible investors to invest in, rather than exclude,
energy companies and actively engage to demand a green transformation of their operations. | en_US |
