Study reveals link between climate change denial and corporate environmental violations

Climate scientists unanimously agree that human-caused climate change is an existing threat to our planet. However, surveys reveal that climate change denial remains prevalent, with nearly 30 percent of American adults, for instance, expressing disbelief in it.

“Since corporate actions on climate change are influenced by individual and societal beliefs, we wanted to explore if local views on the issue affect companies’ environmental responsibility. Our study indicates that companies do behave according to the prevailing social norms of their society”, says Mansoor Afzali, assistant professor of accounting at Hanken School of Economics.

His study conducted in collaboration with Gonul Colak, professor of finance at Hanken School of Economics and Sami Vähämaa, professor of accounting and finance at the University of Vaasa has been published in the Journal of Business Ethics. The study utilises unique data from the Yale Climate Change in the American Mind survey that measures climate change perceptions in each of the 3000+ counties in the US.

“Our study shows that firms headquartered in regions with high climate change denial have lower environmental responsibility scores. We also show that such firms commit more federal environmental compliance violations as administered by the Environmental Protection Agency (EPA) and impose greater environmental costs on society. The combined evidence suggests that climate change denial has tangible societal costs”, says Afzali.

The findings of the study also indicate that better governance structures and strong corporate cultures reduce the effect of local climate change perceptions on firms’ environmental responsibility.

Education and tackling misinformation are crucial

Afzali explains that education and political beliefs are key factors influencing climate change perceptions. 

“Many people lack understanding of the science behind climate change, which affects their views. How the science of climate change is communicated to people is very important. Pseudoscientific arguments and misleading claims, often disseminated by lobbyists or ideological groups, contribute to confusion. Scientists and policymakers therefore have a moral responsibility to tackle such sources of misinformation with better research and communication.”

Afzali believes that governments and NGOs play a critical role in educating people about the science of climate change. He believes such efforts are essential not only to raise public awareness but also to create greater accountability in environmental practices of local firms.

“A key takeaway from our study is that it is important for a society to recognise how climate change perceptions shape corporate behavior. If as a society, we continue to deny the fact that climate change is happening then that is going to affect how corporations treat the environment around us.”

Text: Jessica Gustafsson
Photo: Adobe Stock and Jessica Gustafsson