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

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: 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