“Socially Responsible Investing and Multinationals’ Pollution: Evidence from Global Remote Sensing Data”

Abstract. This paper investigates the impact of Socially Responsible Investment (SRI) 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 located in 13,651 cells 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 only observed in facilities located in OECD countries or those with strict environmental regulations, with deteriorations in other parts of the world. These findings underscore the importance of considering the global nature of MNEs when evaluating sustainability efforts.