Discussion paper

DP18856 International trade in brown shares and economic development

Using global share ownership data from 2002 to 2021, we find that investors’ aggregate carbon sensitivity, i.e. their tendency to divest from more polluting firms, increases with per capita GDP. Especially investment managers, who invest on behalf of their clients, and investors with longer investment horizons contribute to the portfolio greening effect of economic development. We find that this effect is weaker for smaller firms and for firms that are included in the MSCI World index. By acting as backstop owners of brown equities, investors in poorer countries could limit the impact of divestment of such equities in richer countries.


Benink, H, H Huizinga, L Raes and L Zhang (2024), ‘DP18856 International trade in brown shares and economic development‘, CEPR Discussion Paper No. 18856. CEPR Press, Paris & London. https://cepr.org/publications/dp18856