How regional spillovers shape EU firms' climate investments

This study investigates how regional spillovers influence firms' climate investment decisions across EU regions using spatial econometric models. Using data from the European Investment Bank Investment Survey (EIBIS) 2023, we address two key questions: what triggers firms to adopt greener profiles, and how spillover effects impact investment decisions in neighbouring regions. Our study, reveals the existence of significant spatial dependence in firms' climate investment decisions across EU regions, underscoring at the same time the interconnected nature of adaptation and mitigation efforts. Further, risk perceptions, financial capabilities, external conditions like economic and institutional frameworks and EU funds, play a key role in shaping climate investment choices both locally and in neighbouring regions. The results underscore the critical need for spatial considerations in climate policy development, suggesting that policies tailored to regional dynamics can more effectively foster climate resilience and climate investments.