Are Governments Green Shareholders? The Impact of State Ownership on Environmental Performance at Home and Abroad

ABSTRACT Despite the critical role that state‐owned enterprises (SOEs) can play in the green transition, relatively little is known about governments' environmental behavior as foreign shareholders. This study examines the effect of state ownership on domestic and foreign environmental performance. We argue that the incentives associated with state ownership differ depending on whether SOEs operate domestically or abroad. To test this argument, we use random‐effects and logit models on a panel dataset containing information on 96 multinational oil and gas companies from 26 countries, along with their annual domestic and foreign CO 2 emissions for 2013 and 2020. The results indicate that, in domestic operations, SOEs pollute less than private firms in countries with lower levels of economic development, whereas the opposite pattern emerges in more developed economies. Second, SOEs with majority state ownership are more likely to reduce domestic emissions than private firms, regardless of the home country's level of development. Finally, we found that emissions under state and private ownership do not differ when operating abroad.