The Financialization of Climate Risk: Shareholder Influence on Corporate Emissions

• In Event: Environmental Sociology Section Roundtables
  In Refereed Roundtable (60 minute): Table 5: Political Economy, Capitalism, and Markets

Abstract

This study integrates concepts from environmental, economic, and organizational sociology to examine corporate climate behavior through the lens of management-shareholder communication. While after the 2015 Paris Agreement many financial institutions began to take seriously the idea that climate change is a material financial risk, the actual impact of this financialization on corporate polluting behavior remains underexplored. We fill this gap by linking corporate rhetoric in quarterly earnings calls (QECs) to longitudinal changes in greenhouse gas emissions, providing an evidence-based model to evaluate the validity of "greenwashing" critiques. We analyzed 170 S&P 500 companies across five economic sectors (2015–2024), utilizing a natural language processing (NLP) model to quantify environmental ESG discourse within QECs. These data were merged with firm-level equivalent emissions and financial indicators from LSEG Refinitiv and Compustat. We then employed OLS models to estimate the relationship between communication frequency, market equity, and subsequent emissions changes. Our findings reveal a significant temporal shift in the relationship between rhetoric and action. Between 2016 and 2019, increased ESG discourse was positively correlated with future emissions, suggesting early-stage greenwashing. However, by 2020–2021, this trend reversed; each additional ESG sentence was associated with a significant decline in emissions. Conversely, we find robust support for the prioritization of financial goals over decarbonization, as higher market equity remains a strong predictor of increased future emissions. These results provide vital data for calibrating predictive models of corporate accountability and global climate policy.

Authors

• Thomas Marlow, Texas A&M University-College Station

• Harland Prechel

• Zoraya Berlanga Aguilar, Texas A&M University-College Station