Multinational companies headquartered in countries with tougher environmental policies tend to locate their polluting factories in countries with more lax regulations, a new study finds.
Multinational companies headquartered in countries with tougher environmental policies tend to locate their polluting factories in countries with more lax regulations, a new study finds.
While countries may hope their regulations will reduce emissions of carbon dioxide and other greenhouse gases, these results show that these policies can lead to “carbon leakage” to other nations, said Itzhak Ben-David, co-author of the study and professor of finance at The Ohio State University’s Fisher College of Business.
“Firms decide strategically where to locate their production based on existing environmental policies, with the result being that they pollute more in countries with lenient regulations,” Ben David said.
“This highlights the importance of worldwide collective action to combat climate change, given the global scale of firms’ operations.”
Read more at Ohio State University
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