Abstract: A common concern is that ambitious climate policy is—at least in parts—obstructed by corporate lobbying activities. We quantify corporate anti- and pro-climate lobbying expenses, identify the largest corporate lobbyists and their motives, establish how climate lobbying relates to corporate business models, and document whether and how climate lobbying is priced in financial markets. Firms spend on average $277k per year on anti-climate lobbying ($185k on pro-climate lobbying). Recently, firms have tried to camouflage their climate lobbying activities. Large anti-climate lobbyists have more carbon-intensive business models and face more climate-related incidents in the future. Firms that spend more on anti-climate lobbying earn higher returns, probably because of a risk premium. Their stock prices went up when the Waxman-Markey Cap-and-Trade Bill failed, and down when the Inflation Reduction Act was announced.
Mariassunta Giannetti, Stockholm School of Economics
Martina Jasova, Barnard College
Maria Loumioti, University of Texas-Dallas
Caterina Mendicino, European Central Bank
Abstract: Using confidential information on banks’ portfolios, inaccessible to market participants, we
show that banks that emphasize the environment in their disclosures extend a higher volume
of credit to brown borrowers, without charging higher interest rates or shortening debt maturity.
These results cannot be attributed to the financing of borrowers’ transition towards greener
technologies and are robust to controlling for banks’ climate risk discussions. Examining the
mechanisms behind the strategic disclosure choices, we highlight that banks are hesitant to
Discussant: Luca Lin, State University of New York-Buffalo
Abstract: This paper shows that fossil fuel assets provide valuable opportunities for renewable development, and PE firms are better able to identify and realize these opportunities. Using the intensity of sunlight that falls on fossil fuel plants as an exogenous measure of solar investment opportunity and the passage of the investment tax credit that made solar generation commercially attractive, I find that PE firms are more likely to acquire fossil plants that provide higher solar investment opportunities after solar generation becomes viable. PE acquisition of fossil fuel power plants is followed by an 8% higher likelihood of solar development and a 10% increase in the number of solar plants in the same county. This increase comes from institutional investment in solar energy, specifically from the investors related to the PE owners of fossil plants. These findings contradict the notion that PE firms adversely affect the environment, and suggest that regulations prohibiting PE investment in fossil fuels may unintentionally prevent clean energy financing and impede the green transition.
Discussant: Katie Moon, University of Colorado-Boulder
