Change in Ownership Does Not Lead to Increased Adoption of Green Technology

Companies that have been transferred to new owners reduce their pollutant emissions, on average. However, they do not achieve this by adopting new, eco-friendly technologies, but rather by scaling down production or shutting down plants altogether. This finding stems from a study conducted by researchers from ZEW Mannheim, which examines the effects of ownership changes on emissions and economic strength of industrial companies in Europe. The study relies on data from the Mannheim European Panel on Financial Indicators and Emissions (ME-FINE).

“The notable decrease in overall emissions of newly acquired plants and companies in our dataset is primarily due to reduced production rather than the implementation of innovative, environmentally-friendly technologies. On average, acquired companies emit a larger quantity of pollutants compared to other companies under the same parent corporation,” says Bettina Chlond, an economist at ZEW’s “Environmental and Climate Economics” Unit. Despite the absence of a shift towards green technology adoption, these ownership changes can still contribute to pollutant reduction. “When the acquired companies decrease both production and emissions, while the parent company’s total output remains unchanged, it suggests that changes in ownership can be beneficial for the environment overall.”