Across the Boards: Explaining Firm Support for Climate Policy

Abstract

When do corporations stop ignoring or opposing climate action and start to go green? We focus on the role of corporate boards of directors, which shape firms' positions on internal and external issues of corporate governance and public policy. We argue that board decisions to engage constructively on climate issues are likely to be influenced by the choices and experiences of other firms. Learning, socialization, and competitive dynamics are especially important in highly salient and rapidly evolving policy areas, such as climate change. To test this theory, we construct the network of board memberships for US public corporations and uncover robust evidence that climate innovations diffuse among companies that share board members in common and among companies whose board members interact at separate boards. Understanding the unfolding dynamics of corporate climate action requires examining corporate boards and their social context.