2025/07/31 by Marc Cowling, Syahirah Abdul Rahman, Huan Yang · 1 voice
Economics, Econometrics and Finance · Energy · #Climate Change Policy and Economics #Energy, Environment, Economic Growth #Energy, Environment, and Transportation Policies
paper · doi:10.1016/j.eneco.2025.108776
openalex publication_date 2025/07/31 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/12
This study investigates the incorporation of climate change and energy price issues in UK firms' investment decision-making processes, using a comprehensive 2023 survey representative of the UK firm population. Our findings reveal a strikingly low rate of climate change mitigation consideration, with only 13 % to 16 % of investing firms factoring these issues into their decisions. We found that firms investing in process innovation exhibit a 12.03 % higher probability of supporting energy adaptation and a 9.46 % higher likelihood of mitigating energy price impacts. While the overall consideration of climate change in investment decisions remains low, firms that do respond tend to focus on process innovation and plant, machinery and vehicles investments. These targeted investments may yield tangible impacts on reducing environmental footprints and energy price exposure, particularly in high energy use sectors. However, the narrow focus suggests that UK firms' capacity to significantly reduce their environmental impact may be constrained in the short term.