Socially responsible investing and multinationals’ pollution: Evidence from global remote sensing data

This paper investigates the impact of Socially Responsible Investment (SRI) capital on the polluting practices of industrial Multinational Enterprises (MNEs) across all their facilities. We leverage the inverse relation between local pollution and high-frequency satellite-based measurements of local vegetation health through the normalized difference vegetation index (NDVI). Our empirical analysis encompasses a comprehensive dataset of 911 parent companies and 52,806 establishments worldwide. We estimate how the within-cell panel variation in NDVI relates to changes in SRI ownership and document an overall positive association between SRI ownership of a company and the NDVI around the company's establishments. However, this improvement is limited to facilities located within OECD countries. We observe no improvement between SRI and NDVI in non-OECD countries. These heterogeneous findings underscore the importance of considering the global nature of MNEs when evaluating sustainability effort.