The Response of Local Corporate Sustainability to Environmental Disasters: Evidence from Wildfires

65 Pages Posted: 20 Jul 2020 Last revised: 20 Oct 2021

See all articles by Ioannis Branikas

Ioannis Branikas

University of Oregon, Lundquist College of Business, Department of Finance

Gabriel Buchbinder

University of Oregon - Charles H. Lundquist School of Business

Yugang Ding

Peking University

Nan Li

University of Toronto - Rotman School of Management; University of Toronto at Scarborough - Division of Management

Date Written: July 1, 2020

Abstract

Environmental disasters are thought to increase the focus on corporate sustainability in the communities where they occur. Extracting data on wildfires and using ESG ratings and EPA air enforcement actions to construct measures of local corporate sustainability, we study this conjecture. To address the omitted variables concern, we conduct a pre- and post-trends analysis and an instrumental variables analysis using the recently developed Hot-Dry-Windy Index. We show that severe wildfires in a county increase significantly its corporate environmental sustainability in the following year. The impact is stronger in counties with a high fraction of climate change believers or Democratic voters.

Keywords: Corporate Social Responsibility (CSR), Sustainability (ESG), Environmental Disasters, Wildfires, Climate Change, EPA air enforcement actions

JEL Classification: D22, D64, G3, G30, M14, Q01, Q50, Q51, Q53, Q54, Q56

Suggested Citation

Branikas, Ioannis and Buchbinder, Gabriel and Ding, Yugang and Li, Nan, The Response of Local Corporate Sustainability to Environmental Disasters: Evidence from Wildfires (July 1, 2020). Available at SSRN: https://ssrn.com/abstract=3640791 or http://dx.doi.org/10.2139/ssrn.3640791

Ioannis Branikas (Contact Author)

University of Oregon, Lundquist College of Business, Department of Finance ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

Gabriel Buchbinder

University of Oregon - Charles H. Lundquist School of Business ( email )

1208 University of Oregon
Eugene, OR 97403-1208
United States

Yugang Ding

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Nan Li

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-946-3126 (Phone)

University of Toronto at Scarborough - Division of Management ( email )

1265 Military Trial
Scarborough, Ontario M1C 1A4
Canada

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