Fighting the Future: Short-Term Investors and Business Opposition to Climate Policy
Jared Finnegan & Jonas Meckling
Abstract
Business interests have often stymied progress on climate policy, raising the question of the source of business opposition to decarbonization policy. We bring intertemporal trade-offs into the study of business and climate change to build new theory on the relationship between firm ownership and policy opposition. Climate policy confronts companies with an intertemporal trade-off: incur costs today for gains in the future. Firms with short-term owners face pressure to maximize short-term profits, making them unable to undertake this trade-off. They therefore oppose climate policy. We test our argument using a dataset of US firms and an original firm-level measure of climate policy opposition. Firms most exposed to short-term capital oppose policy more than observably similar firms with long-term ownership. Our theory develops the microfoundations of long-term policy making. The greater an economy’s exposure to impatient capital, the more business opposition policy makers are likely to face in adopting long-term policies.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.