Working Paper: NBER ID: w27990
Authors: Lauren Cohen; Umit G. Gurun; Quoc H. Nguyen
Abstract: No firm or sector of the global economy is untouched by innovation. In equilibrium, innovators will flock to (and innovation will occur) where the returns to innovative capital are the highest. In this paper, we document a strong empirical pattern in green patent production. Specifically, we find that oil, gas, and energy-producing firms – firms with lower Environmental, Social, and Governance (ESG) scores, and who are often explicitly excluded from ESG funds’ investment universe – are key innovators in the United States’ green patent landscape. These energy producers produce more, and significantly higher quality, green innovation. In many green technology spaces, they appear to be influential first-movers, not easily substitutable, and to produce ongoing foundational aspects of innovation and commercialization on which other alternative energy producers build. This is broadly true across the green patenting spectrum, and continues through the present day, concentrating specifically in certain green technology branches (for instance, in carbon capture).
Keywords: ESG; green patents; energy firms; innovation
JEL Codes: G11; G30; O31; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Energy firms with lower ESG scores (L94) | Green patent production (Q55) |
| Energy firms (L94) | Green patenting rates (Q55) |
| Energy firms (L94) | Quality of green patents (Q55) |
| Energy firms (L94) | First-mover innovators in green patenting (Q55) |
| Energy firms (L94) | Involvement in carbon capture technology (O36) |
| Energy firms (L94) | Unique role in green innovation space (Q55) |