NEW YORK, NY – On Earth Day, the world’s largest secular observance, over a billion people will come together to celebrate the achievements of the environmental movement and to push for changes in human behavior and government policy. Columbia Business School’s faculty experts, who are at the forefront of environmental, climate, and geoengineering issues, are conducting groundbreaking research that sheds light on the climate’s impact on crops, ESGs, climate pledges, and more. 

The following seven studies by Columbia Business School faculty provide insights into vital topics that can enhance outcomes for our planet: 

• When Climate Hits Home: The Impact of Local Temperature on Public Beliefs— As climate disasters become more prevalent worldwide, they are affecting people's perceptions of climate change. According to a meta-analysis, conducted by Professor Eric Johnson, Norman Eig Professor of Business and Director of the Center of Decision Sciences, local temperatures have a significant impact on public beliefs and concerns about climate change. The findings suggest that people's experiences influence their beliefs about climate change, and recent local temperatures can shape their beliefs. The study, which included 31 observations and 82,952 participants, found that a 1-degree Celsius increase in temperature increases worry about climate change by 1.2%. The research also reviewed related effects due to other extreme weather events, such as hurricanes, floods, and erosion, on people's beliefs and behaviors related to climate change. As weather variations continue to rise, the study's authors recommend better communication to help people better understand the complex phenomenon of climate change. Read the full study here. 
• Defining Climate Change: Different Interpretations of “Uncertainty” and “Risk” are Dangerously Skewing Public Perception— Professor Gernot Wagner, author of the book Climate Shock: The Economic Consequence of a Hotter Planet, writes in an essay that there is a disconnect in the interpretations in the public’s perception of the threats of climate change which causes a delay in the adoption of timely solutions needed to avoid further irreparable damage to the planet. In his essay, Professor Wagner focuses on the enormous impact that words have when describing climate change. To most of the public, risk means a danger that must be addressed, and uncertainty means a lack of clarity about whether there is any significant danger at all. To scientists and economists, uncertainty is worse than risk as it indicates the possible range of just how bad a very real danger will be and is categorized as something that can multiply risk. Professor Wagner argues that climate change is inherently uncertain; however, the public perceives that uncertainty as scientists not knowing what may happen and, therefore, not having a solution to the problem, and as a result, they take no action. In actuality, uncertainty means there is no way to measure the inputs making the risk higher. The essay concludes that using broader definitions of risk and uncertainty will align scientists and the public on not only the effects of climate change but, more urgently, on solutions. Read more about Professor Wagner’s essay here. 
• Don't Fake It Until You Make It on Carbon Mitigation: New Study Reveals Hollow Net-Zero Pledges Drive Stock Prices Down— Professor Shivaram Rajgopal, Roy Bernard Kester and T.W. Byrnes Professor of Accounting and Auditing, conducted research examining the credibility of carbon reduction pledges and the factors that impact the market’s response to them. In an analysis of the net-zero pledges of 69 oil and gas companies, Professor Shivaram Rajgopal finds that companies producing more hydrocarbons are more likely to make formal pledges to cut emissions. However, the research finds that stakeholders consider companies less credible when they make pledges to achieve net zero with overly long timelines, have not established a board-level committee to oversee their emission goals, or do not tie management compensation to emission reductions. As a result, these companies experience a drop in stock price. The research offers important new insight into evaluating and verifying net zero pledges. Read more about Professor Rajgopal’s research here. 
• Are ESG Funds Truly Stakeholder-Friendly Investments or Just a Marketing Gimmick— Professor Shivaram Rajgopal finds that socially responsible funds do not necessarily follow through on their proclamations of concerns for stakeholders. Using a sample of ESG mutual funds in the United States from 2010 to 2018, the study found that ESG funds hold portfolio firms with worse compliance records for labor and environmental laws compared to non-ESG funds managed by the same financial institutions. The study also found that ESG funds hold stocks that are more likely to disclose carbon emissions performance but also have higher carbon emissions per unit of revenue. Despite holding firms with worse compliance records, ESG funds have higher average ESG scores, which are correlated with the quantity of voluntary ESG-related disclosures but not with actual levels of carbon emissions. Additionally, ESG funds underperform financially relative to other funds within the same asset manager and year and charge higher fees. Read the full study here. 
• The Green Economy: Leveraging Carbon Accounting and Offsets for Success— Professor Geoffrey Heal, Donald C. Waite III Professor of Social Enterprise, presents a framework for measuring greenhouse gas emissions generated by companies and participants in a nation's economy, highlighting the significance of Scope 1 emissions (emissions from a company's own operations) from a national policy perspective. The research shows that to measure a company's contribution to national GHG emissions correctly, its Scope 1 emissions must be combined with a portion of the emissions of the household and government sectors. Furthermore, Professor Heal examines the validity of carbon offsets and the conditions that must be met for them to be an effective means of reducing emissions. Read the full study here.  
• Climate’s Impact on Crops: How Rising Temperatures are Threatening More than Food— Professor Gernot Wagner, author of the book Climate Shock: The Economic Consequence of a Hotter Planet, found using biomass materials to reduce emissions does not have a positive outcome because as crops decline due to rising temperatures, they will not be effective in creating energy and reducing carbon emissions. Professor Wagner and his co-author Columbia University Professor Wolfram Schlenker, find that if we delay global mitigation alongside large-scale biomass for energy until 2060, when global warming exceeds about 2.5 °C, the number of crops will be too low to reduce carbon emissions, and we will be unable to meet the Paris goal of even 2 °C by 2200. The findings reinforce the urgency of early mitigation, ideally by 2040. With no action– no new technologies will become available in the near future to compensate for the reduced capacity of biomass in reducing carbon emissions – the world will face irreversible damage and severe food insecurity. Read more about Professor Wagner’s research here.  
• 2050 and Beyond: The Roadmap to 80% Reduction in U.S. Emissions— In 2015 apart of its Paris COP 21 submission, the United States set the aspiration to reduce greenhouse gas emissions (GHG) 80 percent by 2050. Research from Professor Geoffrey Heal, investigates the feasibility and cost of reaching this goal. Professor Heal found at the time that it would be possible to achieve but would require an investment ranging from $42 billion to $176 billion per year. Professor Heal finds that with the extensive use of solar and wind power, the U.S. could achieve its 2050 aspirations and reduce GHG emissions. The study highlights the importance of decarbonizing electricity production to decarbonize the whole economy. It shows the massive investment needed in new energy-generating capacity, storage, and transmission to reach the 2050 pledge. The investment estimates presented may have been revised since 2015. Read the full study here. 

To learn more about the cutting-edge research being conducted at Columbia Business School, please visit www.gsb.columbia.edu.

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