NOVAFRICA Working Paper: Socially responsible investing and multinationals’ pollution: Evidence from global remote sensing data

New research examines how Socially Responsible Investment (SRI) ownership relates to multinationals’ environmental performance, using satellite-based vegetation data from over 52,000 facilities worldwide.

Title:

Socially responsible investing and multinationals’ pollution: Evidence from global remote sensing data

Virginia Gianinazzi

Nova School of Business and Economics

Victoire Girard

Nova Nova SBE, LEO, and NOVAFRICA

Mehdi Lehlali

Alliance Manchester Business School, University of Manchester

Melissa Porras Prado

Nova SBE and CEPR

ISSN 2183-0843
Working Paper No 2505
December 2025

Abstract:

This paper examines how Socially Responsible Investment (SRI) capital affects the environmental footprint of multinational enterprises. We exploit the inverse relationship between local pollution and high-frequency-and-precision satellite-based measurements of vegetation health, captured through the normalized difference vegetation index (NDVI). Combining NDVI with SRI ownership data for 52,806 facilities belonging to 911 multinationals in 124 countries between 2006 and 2020 allows us to leverage both cross-sectional and within-facility variation in SRI exposure over time. We find that, on average, greater SRI ownership is associated with improved vegetation health in surrounding areas, consistent with reductions in firm-induced environmental damage. Using mergers as a plausibly exogenous source of variation in SRI ownership corroborates these findings. However, exploiting the global structure of multinational production networks, we find a striking asymmetry: improvements near facilities located in OECD countries coincide with deterioration near the same firms’ facilities in non-OECD countries, consistent with pollution offshoring. Finally, we show that this asymmetry intensifies with more active investor oversight, suggesting that investor engagement alone is insufficient to mitigate environmental harm in the absence of strong domestic regulation or global coordinated monitoring.

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