Relationship Between Environmental Risks and Corporate R&D Expenditures

Recently, the world is facing climate change caused by global warming. The world is making efforts to reduce greenhouse gases. Industries that emit a lot of carbon account for a high proportion of Korea's industrial structure. The role of companies is very important. Companies exposed to environmental risks are likely to see their corporate value decrease. It is likely that a lot of research and development spending will be needed to solve this problem. This study investigate the Relationship between environmental risks and corporate R&D expenditures. Environmental risk was measured by greenhouse gas emissions and energy emissions announced by the Ministry of Environment(NGMS). R&D expenditures were measured as the sum of capitalized and non-capitalized R&D expenditures. As a result of the study, groups with high environmental risks spent less on average on research and development than groups with low environmental risks. As a result of regression analysis, environmental risk have a negative relationship with research and development expenditures. In other words, The higher the environmental risk, the less research and development costs are spent. These research results can be interpreted to mean that the more research and development expenditures, the lower the environmental risk. Follow-up research will be needed to determine the effect of R&D expenditures on reducing environmental risks.