Managing Environmental Risk

We document sizable increases in corporate demand for employees with environmental skills over the 2010-2020 period. Nearly half the demand for green skills is due to time-varying firm-level characteristics. Demand for green skills is more salient after the December 2015 Paris Climate Agreement and especially pronounced among firms with significant environmental risk exposures. Consistent with firms using green jobs as a climate risk management tool, firms that demand green labor reduce harmful emissions and are less likely to be subject to environmental enforcement actions. Further, firms with green jobs lower emissions by pursuing abatement strategies rather than lower production volumes. Overall, our results suggest that investments in human capital allow firms to reduce environmental risk.

To join the lecture via ZOOM, please contact Shasha Li.