Who Needs To Be Seen To Be Green? How Reputational Pressure Affects Responses To Climate Change
Domestic and international laws have been slow and ineffective at regulating firms in response to climate change. For this reason, voluntary self-regulation and private regulatory bodies have become increasingly important. Despite claims that firms oppose costly carbon mitigation strategies, previous research has shown variation in the extent to which firms signal their performance on climate change. What explains this variation? I develop a four-pronged theory of reputational pressure to answer this question.

First, firms face different reputational pressure based on their primary consumer audience. Business-to-consumer firms face greater reputational costs of failing to act on climate, and therefore avoid exposure.

Second, ‘Climate-conscious’ reputations matter when consumers are primed to value them. I argue that climate disasters induce consumer awareness, and firms respond by signalling to audiences their climate reputation.

Third, reputations have cascade effects. Firms are more likely to move to carbon mitigation following large early-movers within their sector.

Fourth, there is a trade of for firms signalling action on climate; attention brings greater scrutiny, which may damage the firms reputation more than keeping quiet. Following poor climate evaluations, firms become much less likely to disclose in the future.

Using Australia as a case study, I employ data on firm disclosure and climate-mitigating action from the Carbon Disclosure Project between 2010-2021. In addition to natural disaster data from EMDAT, I proxy for the material effects of natural disasters using insurance claims, and use a difference-in-difference estimator to compare high and low years following climate disasters. The empirical tests show reputational pressure can both induce and paralyse firm action on climate.
Date: 7 June 2024, 13:00 (Friday, 7th week, Trinity 2024)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A
Speaker: Hayley Pring (Oxford)
Organising department: Department of Politics and International Relations (DPIR)
Part of: Politics Research Colloquium
Booking required?: Not required
Audience: Members of the University only
Editors: Holly Omand, Daniel Burton