Corporations that presumably support green initiatives have been revealed to be actively working to derail pro-environment laws through political campaign contributions to climate-unfriendly lawmakers, according to a new study from the
The research, undertaken by Dr
"Companies today are more politically active than they were some decades ago. This trend coincides with increasing public scrutiny over their sustainability performance. The prevailing view on corporate political engagement is that 'brown' firms are likely to back politicians who obstruct pro-climate policies, and that environmentally proactive firms will support climate-friendly politicians."
Surprisingly,
"We find that, over the past two decades, greener firms directed more money towards environmental obstructionists through their Political Action Committees (PACs)."
The research examined over 1200 firms in the
Based on the voting records, the researchers identified a set of lawmakers as salient environmental obstructionists. On average, obstructionists were found to support only 7% of the bills introduced to tackle environmental issues. By doing this, the researchers say, they are able to map corporate PAC contributions to the obstructionist politicians and yield some key findings.
Most strikingly, firms with excellent environmental scores were found to donate more to anti-climate politicians. On average, a firm with a top
The study also found that political affiliations (such as Democrat versus Republican firms), general policy preferences and other firm characteristics such as industry, size and profitability cannot explain the findings documented above. According to the researchers, the most likely explanation is the one based on economic costs - green firms face the highest regulatory burden.
"Their environmental records are widely publicised, but there is no disclosure requirement for political activities in the US. This enables the climate leaders to engage in hypocrisy, with respect to the environment."
The study also identified a key channel that drove such corporate hypocrisy - "brown" institutional investors. The researchers collected all PAC contributions made by institutional shareholders in each
Lastly, the study revealed that corporate hypocrisy on the climate pays. Upon the passing of anti-environment bills in
The researchers say the study holds important implications at all levels of industry when it comes to making a tangible positive impact on the environment; for investors that seek green firms in their portfolios, for government agencies that grant benefits to firms based on the environmental scores, and to policymakers that attempt to deliver effective regulations to combat the climate change.
The research paper "Why Do Green Firms Support Anti-Climate Legislators?" is available to be read via SSRN.
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