Abstract

This article models environmental and climate change policies of companies of 40 countries of the European Union, Eastern Europe, Central Asia & Middle East, and North Africa on business characteristics, environmental regulations, adverse environmental events, and financial constraints, among other factors. The impact of such policies on innovation and financing opportunities is also explored.Estimation results suggest that high-quality green management has a positive impact on labor productivity, overall sales, and product and process innovation. At the same time, innovative businesses are more likely to make mixed-green and green investments. Despite these synergistic benefits, green businesses may be perceived as riskier by lending institutions. Accordingly, the credit applications of such companies are more likely to be rejected and the credits granted are subject to collateralization more frequently. Nevertheless, environmentally -friendly policies may have a moderating effect on land & buildings or personal collateralization relative to loan size.