Corporate Carbon Divestitures and Green Reinvestment: The Role of Capital Reallocation and Investor Engagement [Draft]

Updated: 03 November, 2026

A central concern in the corporate green transition is asset reshuffling: carbon-intensive public firms may sell “dirty” assets to private owners, reducing their reported carbon exposure without reducing emissions from the transferred assets. This paper examines whether divesting firms subsequently reallocate capital toward green productive capacity. Using plant-level data and patent-level measures of green innovation, I find that firms exiting brown generation expand green physical assets, primarily through greenfield construction, but do not increase green patenting. Exploiting the rule-based construction of the Climate Action 100+ Focus List, I show that investor engagement shifts corporate investment away from brown and toward green capacity. Finally, I combine seller reallocation, buyer investment, plant operation, and retirement responses in a counterfactual emissions-accounting framework. The environmental consequences of divestiture depend not only on the ownership and operation of transferred assets, but also on the subsequent investment decisions of sellers and buyers.

• Presented at: Yale Environmental Economics Seminar, Yale School of the Environment, 2026; Yale Finance Lunch Seminar, Yale School of Management, 2026

A Review on ESG Investing: Investors’ Expectations, Beliefs and Perceptions, with Roman Kräussl & Denitsa Stefanova [Journal] [PDF]

Journal of Economic Surveys, 2024, 38(2), 476–502

This study examines the recent literature on the expectations, beliefs and perceptions of investors who incorporate ESG considerations in investment decisions with the aim to generate superior performance or make a societal impact. We find strong evidence that investors have a preference for ESG and that their actions can generate positive social impact through engagement. The shift towards more sustainable policies in firms is motivated by the higher market values and the lower cost of capital of green firms driven by investors’ choices.

• Award: Top Cited Article 2024, Journal of Economic Surveys

ESG Policy Uncertainty, with Roman Kräussl & Denitsa Stefanova [SSRN] [Draft]

We examine whether the uncertainty related to developments in ESG regulation is reflected in asset prices. We proxy the sensitivity of firms to ESG regulation uncertainty by the disparity between the components of their ESG ratings. Firms with high ESG disparity have a higher option-implied cost of protection against downside tail risk. The impact of the misalignment across the dimensions of the ESG score is distinct from that of the level of the ESG score itself. Aggregate downside risk bears a negative price for firms with low ESG disparity.

• Presented at: 6th GRASFI Annual Conference (Yale University) 2023; Liechtenstein Workshop on Sustainable Finance 2023; 5th JRC Summer School on Sustainable Finance 2023; 12th Portuguese Finance Network Conference 2023; European Financial Management Association Annual Meeting 2023; 39th Conference of the French Finance Association (AFFI) 2023
• Award: VP Bank Best Paper Award, Liechtenstein Workshop on Sustainable Finance 2023

Do Firms Benefit from Public Health Interventions? Evidence from Malaria Control in Sub-Saharan Africa, with Tania Diaz-Bazan, Eli Fenichel & Stefano Giglio [Draft]

This paper studies whether, and by how much, firms benefit from large-scale public health interventions. We study donor-financed malaria interventions in sub-Saharan Africa, exploiting year-to-year variation in global funding interacted with regions’ pre-program malaria burden. A ten-percentage-point increase in insecticide-treated-net coverage lowers the Plasmodium falciparum parasite rate by approximately nine percentage points, and a ten-percentage-point reduction in malaria prevalence increases maize and commercial-scale mining production by approximately thirty percent. Our findings push toward a public–private financing architecture in which firms contribute in proportion to the benefits they extract, freeing scarce donor resources for diffuse-benefit settings such as smallholder agriculture and child health.

Schooling Without Earnings: Education Reforms and Labour-Market Outcomes in Nigeria, with Ezenwa Ndubuisi [Draft]

We study Nigeria’s 1999 Universal Basic Education reform, exploiting cohort-by-state variation in reform exposure interacted with pre-reform education deficits. Fully exposed cohorts in the most deficient states gained about 1.4 additional years of schooling. An additional year of reform-induced schooling raises formal-sector employment by 4.2 percentage points but leaves the wage return statistically indistinguishable from zero, consistent with credential supply outpacing formal-sector labour demand.

Mechanisms and Incentives for Investing in Nature’s Health Benefits, with James Hassell, Anne Mottet, Stefano Giglio, Eli Fenichel & co-authors

Revise and resubmit, Proceedings of the National Academy of Sciences

We explore why and how the public and private sectors can invest in reducing the negative health impacts of environmental change. We provide a framework for when health benefits can be monetised and organise ten investment cases into a taxonomy defined by investor type, incentives, and the mechanism through which health benefits can be internalised.

The Green Innovation Discount: Perceived Cost of Capital and the Financing of Green Technology, with Stefano Giglio & Denitsa Stefanova

Building on my job market paper, this project examines whether firms’ investments in green technology are reflected in their implied and perceived cost of capital, and whether markets distinguish between adopting existing green technologies and developing new ones. Preliminary results: green innovators perceive a cost of capital about 0.45 percentage points lower than comparable firms, a discount concentrated in energy and utilities that strengthens after 2016 among Climate Action 100+ engagement targets.

Is the World Bank’s Climate Goal Distortionary?, with Tania Diaz-Bazan, Eli Fenichel & Stefano Giglio

Full-text analysis of World Bank project documents around the retired 45% climate co-benefits target. Preliminary findings show label inflation but no deterioration in project performance.

Investment in Natural Capital, Firm Productivity, and Firms’ Financing Conditions, with Stefano Giglio, Eli Fenichel & Ziyue Tian

Uses 1,239 World Bank natural-capital projects since 1985 to ask whether nature-based public investment raises firm productivity and eases financing conditions.

The Shareholder Value of AI-Driven Labor Substitution

Do investors reward layoffs that firms attribute to AI? Event-study evidence from 13,028 time-stamped Reuters news articles on layoffs (2020–2026), combined with high-frequency stock prices and subsequent operating outcomes.

Nature-Based Interventions and Insured Losses: Evidence from Kenya, with Eli Fenichel & Stefano Giglio

An emerging project exploring whether nature-based interventions reduce insured losses and improve insurance outcomes in Kenya. I am currently engaging with Kenbright, an insurance firm operating in East Africa, to explore the potential for developing this research, beginning with watershed restoration in the Upper Tana–Nairobi basin.

Do Nature-Based Solutions Generate Measurable Health Benefits? A Meta-Analysis, with co-authors at Yale, the Smithsonian & The Nature Conservancy [Preregistration]

A preregistered meta-analysis of the health effect sizes of nature-based interventions aligned with the Kunming–Montreal Global Biodiversity Framework. The estimated effect sizes inform my work on nature-based interventions and insured losses in Kenya, by identifying which interventions and hazards are most likely to generate measurable financial benefits.

Who Teaches the Teachers? Competency Thresholds, Mass Dismissal, and Learning Outcomes in Nigeria, with Ezenwa Ndubuisi

Regression-discontinuity design around the 75% pass mark of Kaduna State’s 2017 teacher competency test, which marked more than 21,000 teachers for dismissal.