Public governance versus corporate governance: Evidence from oil drilling in forests

Petroleum companies explore for oil and gas in remote and biodiverse forested areas. To analyze environmental impacts, we combine global company-level data on oil drilling with forest loss data. Our findings reveal that drilling in countries with better public governance leads to lower forest loss. However, we did not find evidence of reduced forest clearance among companies with presumed better corporate governance practices. These results challenge the notion of a “pollution halo” effect.

Image courtesy of interviewee. December 20, 2023

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