Ecological Responsiveness and Corporate Real Estate

Real estate’s large impact on the natural environment has led to a rise in energy-efficient, green building. Financial intermediaries may be affected by this trend, at the level of the company, the asset owner (REIT), and the institutional investor. This paper investigates the ecological responsiveness of more than 11,000 firms in specific industries by analyzing the decisions that these firms make in occupying office space. Controlling for building quality and location, we find that corporations in the oil and banking industries, as well as non-profit and public organizations, are among the most prominent green tenants. Furthermore, measures of an industry’s human capital intensity are positively related to the propensity to lease green office space. These empirical findings confirm the theoretical framework on economic advantage and institutional pressure as important determinants for the ecological responsiveness of firms.