# Russian Companies' Motivations for Making Green Investments
## 2 Research Concept and Literature Review
### Environmental Regulation and Public Funding
Perhaps the reason for the differences in the assessment of the role of environmental regulation is due to the varying degrees of its stringency. The stringency of environmental regulation has also been found to matter ([PERSON] et al., 2022). Current research proves a U-shaped relationship between environmental regulation and investment in green technological modernization. This means that as the regulation tightens, its effect gradually changes from inhibition to stimulation ([PERSON] et al., 2020). The impact of new market-based green economy instruments, namely carbon emission trading policy (CETP), is also the focus of current research. The key question is: can CETP influence green investment and how will this influence manifest itself? There is no single opinion in this area yet. There is also an assumption that the effects of this policy will differ from country to country. However, one of the recent studies ([PERSON] et al., 2022) argues, using China as an example, that carbon trading policies encourage green investments by companies. This conclusion applies to nonstate companies, large companies and companies from clean sectors of the economy. At the same time, it is noted that internal policy incentives, such as the cost compliance effect and the innovation compensation effect, have played the largest role in this process so far. That is, the very need to participate in the carbon trading system encourages companies to make green investments, while external factors, such as the price of carbon, liquidity and activity of the carbon market, do not serve as such incentives. Recently, several studies have appeared that propose to evaluate the impact of the policies simultaneously stimulating and regulating green investments. For example, an article ([PERSON] et al. 2022) describes the option when a system of subsidies for green innovations in certain industries is introduced along with a progressive carbon tax. The researchers argue that there is a synergistic effect of green innovation from those green innovation subsidies and carbon taxes. The benefits to the country's budget are lower subsidy costs, and the tax creates additional incentives for companies to adopt green innovations, while encouraging them to reduce carbon emissions. To increase the synergistic effect, the authors of the article proposed varying the carbon tax rate, rather than the share of subsidies. Another study ([PERSON] 2022) examined the simultaneous impact of environmental subsidies and environmental taxes on the efficiency of corporate green investments. Having considered the mechanism of their joint influence on companies, the author concludes that it is necessary to improve the state supervision of green investments in order to increase the efficiency of spending public funds. At the same time, it is necessary to use the opportunities of the market mechanism to strengthen the supervision of environmental taxes and stimulate companies. It is important to create competitive conditions for companies to access state subsidies and to exclude rent-seeking activities by companies. The analysis carried out in this study allows us to formulate the third research hypothesis:  
**Hypothesis 3 (H3). **_Green investment flows are strongly influenced by public financing decisions._