This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2025
  4. Program
  5. ESG and Sustainable Finance
« Back to Results

ESG and Sustainable Finance

Paper Session

Saturday, Jan. 4, 2025 2:30 PM - 4:30 PM (PST)

San Francisco Marriott Marquis, Yerba Buena Salon 10 & 11
Hosted By: American Finance Association
  • Kelly Shue, Yale University

Corporate Actions as Moral Issues

Zwetelina Iliewa
,
University of Bonn
Elisabeth Kempf
,
Harvard University
Oliver Spalt
,
University of Mannheim

Abstract

We study how a representative sample of the U.S. population evaluates a broad range of corporate actions from a nonpecuniary perspective. Our core findings, based on large-scale online surveys, are that (i) self-reported nonpecuniary concerns are large, both for stock market investors and non-investors; (ii) concerns about the treatment of workers and CEO pay rank highest, higher than concerns about workforce diversity and fossil energy usage; (iii) moral universalism (Enke (2024)) emerges as a key driver of nonpecuniary preferences, explaining substantial variation both across participants as well as across corporate actions. Combined, our findings provide new evidence on the importance of moral concerns as a driver of nonpecuniary preferences in the context of corporate actions.

Pollution-Shifting vs. Downscaling: How Financial Distress Affects the Green Transition

Aymeric Bellon
,
University of North Carolina-Chapel Hill
Yasser Boualam
,
University of North Carolina-Chapel Hill

Abstract

Polluting practices can reduce costs in the short-term at the expense of exposing firms to significant environmental liability risk. This paper examines whether firms increase their pollution intensity as they become more financially distressed, akin to a risk-taking motive. We construct granular pollution measures for the oil and gas industry and empirically confirm the prominence of this channel therein. We then calibrate a rich dynamic model featuring endogenous default, clean and dirty capital, and financing frictions to study and quantify the relationship between financial distress and pollution. Our counterfactuals point to the limited impact of blanket divestment campaigns, as firms may scale down and pollution-shift their assets simultaneously. Tilting strategies are more effective at taming overall pollution.

Willingness to Pay for Carbon Mitigation: Field Evidence from the Market for Carbon Offsets

Matthias Rodemeier
,
Bocconi University

Abstract

This paper leverages a large-scale field experiment with an online supermarket (N=255,000) where consumers are offered carbon offsets that compensate for emissions. Consumers are price-elastic but fully inelastic to the environmental impact of the offsets---consistent with ``warm glow" utility. When the firm offers to share the offsetting costs

Brown Capital (Re)Allocation

Olivier Darmouni
,
Columbia University
Yuqi Zhang
,
Columbia University

Abstract

This paper studies capital reallocation in the fossil fuel industry by investigating who
owns coal power plants – the largest single source of global greenhouse gas emissions.
We build a bottom-up measure of the ownership of these brown assets by merging asset-
level data on firms’ plant ownership (real capital) in Europe with firms’ shareholder data
(financial capital). We document a sharp increase in private firms’ coal ownership since
2015, accompanied by a large decline in public equity ownership. A formal decomposition
shows that the large decline in public equity ownership was however not due to capital
reallocation (“exit”) but to capital utilization: these investors scaled down plants, not
sold them. Instead, state investors played a crucial role: they sold to private firms, while
being the slowest at scaling down their plants. We illustrate the economics of brown
capital allocation by calibrating a model in which asset owners vary in how they value
externalities. The possibility of nationalization of coal plants by state investors that
value social factors (e.g. jobs, “energy security”) is an important limit to the ability of
“green finance” to decrease aggregate emissions, in line with recent episodes in Germany
and Poland.

Discussant(s)
Sascha Füllbrunn
,
Radboud University Nijmegen
Daniel Green
,
Harvard University
Florian Heeb
,
Massachusetts Institute of Technology
Ran Duchin
,
Boston College
JEL Classifications
  • G3 - Corporate Finance and Governance