Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/310333 
Authors: 
Year of Publication: 
2025
Series/Report no.: 
EIB Working Papers No. 2025/03
Publisher: 
European Investment Bank (EIB), Luxembourg
Abstract: 
We examine the relationship between capital structure and carbon intensity in manufacturing firms using a novel dataset that combines information from the EU Emission Trading System with firm-level financial accounts. Our findings indicate that higher financial leverage is associated with lower emission intensity at the firm level, primarily due to long-term debt, suggesting that improving access to such finance is generally conducive to corporate emissions reductions. However, this effect varies along the carbon intensity distribution. For firms with very high carbon intensity, increased leverage is linked to significant reductions in emissions, suggesting that better access to finance can facilitate the adoption of green technologies. Conversely, for firms that are already relatively carbon efficient, the effect disappears.
Subjects: 
low-carbon transition
climate change
debt finance
financial leverage
EU ETS
JEL: 
C58
G32
Q51
Q56
Q58
Persistent Identifier of the first edition: 
ISBN: 
978-92-861-5901-5
Document Type: 
Working Paper

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