Patrick Bolton is Barbara and David Zalaznick Professor of Business at Columbia Business School, and Marcin T. Kacperczyk is Professor of Finance at Imperial College London. This post is based on their recent paper.
Apart from COVID-19, few topics garner as much global attention these days as the looming climate crisis. And let us not forget that before the outbreak of the pandemic the front pages of most newspapers were filled with stories and pictures of the extraordinary wildfires in Australia, which by some estimates have cost the country up to 5% of GDP. The visible warming of the planet (2019 was the warmest year on record) has put climate change at the centre of people’s preoccupations all over the world. Yet, even a casual observer can see that countries have implemented widely differing policies to combat climate change. Some regions of the world, most notably Scandinavia, have been at the forefront of transitioning their economies towards renewable energy. Other countries have taken very limited steps in this regard, or even reversed past policy commitments towards reducing carbon emissions, as the United States has done by brashly pulling out of the 2015 Paris Agreement. Similar antagonistic stances towards climate change mitigation have been appallingly on display by the Australian government in the midst of the worst wildfires in Australian history and by the Brazilian government facing a resurgence in forest fires in the Amazon by wildcat miners and farmers.
