Research highlights from the GGKP’s Sixth Annual Conference – Q&A with Tobias Kruse

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14 November 2018

On 27-28 November 2018, the GGKP's Sixth Annual Conference was held in conjunction with the OECD's 2018 Green Growth and Sustainable Development Forum (GGSD) on the theme of "Inclusive solutions for the green transition: Competitiveness, jobs/skills and social dimensions" in Paris, France.   

Tobias Kruse presented his paper 'How does going green affect firms’ profitability and valuation? Evidence from a global firm level dataset'   (co-authored with Myra Mohnen, Peter Pope, Misato Sato) at the conference on 28 November in Session D: Green Growth Strategies for Firms. Tobias is a PhD candidate in Environmental Economics at the London School of Economics (LSE) and a research assistant at the Grantham Research Institute on Climate Change and the Environment. 

1) Please briefly describe the topic and conclusion of your research. 

Over the next two decades, hundreds of trillions of dollars are needed for green infrastructure investment, green buildings, green innovation and more. While the green economy transition offers major opportunities for business, large-scale private sector investment in the green economy has yet to materialise.

Our project analyses how going green affects the financial performance of businesses. The aim is to provide evidence on what kinds of policy action and support is needed to shift private sector investments into low-carbon activities. Our initial findings indicate that greener business operations are associated with higher profitability. The impacts of going green on the expected profits of firms are mixed.

2) What are the main policy messages/implications?

Businesses will move into greener markets if there are clear market opportunities for green goods and services; policy interventions geared towards boosting consumer- or industry-demand for green goods and services could help to create green market space for businesses. Policy option towards this end include demand-side pricing measures, environmental regulations, or sustainable procurement policies. In addition, well-designed and properly implemented green transition policies can provide an appropriate regulatory framework for firms to invest in these new technologies.   

3) Which session are you interested in attending at the at the conference/forum and why?

I am particularly interested in plenary Sessions 1 and 2, Green growth and Competitiveness: firms who win, firms who lose, and Jobs & Skills Transition Management and Jobs & skills transition management: Strengthening green human capital, as well as parallel sessions focused on these themes. They are closely related to my research, and I look forward to discussions on policy design for an effective green transition. 

4) What are the next steps for your research?

We are currently working with researchers across different disciplines including corporate finance and accounting, as well as data providers to improve the robustness of our results. We plan to reach out to the business, investment and policy communities to see how our results can help inform public and private sector decision making. 

5) What are the opportunities for collaboration around this issue? 

There are opportunities to partner with policy makers, industry stakeholders and investors on this topic. Collaboration with policy makers can help us identify and highlight the downstream implications of effective policy design. Working with industry stakeholders and investors could help us improve our understanding of firms’ motivations, decision-making processes and potential barriers to engagement in green sectors.

The opinions expressed herein are solely those of the authors and do not necessarily reflect the official views of the GGKP or its Partners.