From Ashes to Action: The Effect of Wildfires on the Growth of Local Corporate Environmental Sustainability in Areas where Governments are Eco-friendly But Lack Commitment
66 Pages Posted: 20 Jul 2020 Last revised: 6 Feb 2024
Date Written: July 1, 2020
Abstract
Extracting data on wildfires and measuring an area's corporate sustainability using its firms' ESG ratings, we show that severe wildfires in a county significantly enhance its corporate environmental sustainability growth. To address the omitted variables concern, we use as an instrument the Hot Dry-Windy Index. The impact dominates in counties whose governments participate in voluntary environmental programs. Within that set of counties, the effect is stronger when the environmental commitment of local governments is low, suggesting that, given an area's eco-friendly inclination, local firms take initiatives after a severe wildfire to fill in the gaps in public officials' engagement with sustainability.
Keywords: Corporate Social Responsibility (CSR), Sustainability (ESG), Environmental Disasters, Wildfires, Climate Change, Government Environmental Sustainability and Commitment (ICLEI)
JEL Classification: D22, D64, G3, G30, M14, Q01, Q50, Q51, Q53, Q54, Q56, Q58
Suggested Citation: Suggested Citation