No. 73: Will nature-loving CEOs make the world greener?

Abstract

This paper examines whether the preference for nature conceived during CEOs’ childhood will govern their decisions when operating a company. Using the latest findings in social ecology studies, this paper constructs an exogenous proxy of CEOs’ preference for nature protection using hand-collected, city-level greenspace data. By identifying whether CEOs with a higher preference for nature protection are more likely to participate in projects to protect the environment, i.e., Clean Development Mechanism projects, this paper finds that CEOs’ preference for nature protection has a positive, economically relevant, and robust relation with firms’ actions to mitigate global warming. The results are consistent with CEOs imprinting their personal preferences on the firms they manage. This paper introduces a new measure of the preference for nature protection and provides a potential predictor of firms’ future climate mitigation.