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The Limits of Carbon Disclosure: Theorizing the Business Case for Investor Environmentalism
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Adam Harmes: Adam Harmes is an Associate Professor in the Department of Political Science at the University of Western Ontario. He is the author of Unseen Power: How Mutual Funds Threaten the Political and Economic Wealth of Nations (2001); and The Return of the State: Protestors, Power-Brokers and the New Global Compromise (2004). His current research projects include investor environmentalism as well as the competition between neoliberalism and social democracy in multilevel governance.
, 2011, vol. 11, issue 2, pages 98-119
Global Environmental Politics Abstract:
This article examines the potential effectiveness of socially responsible investment (SRI) and investor environmentalism through carbon disclosure in terms of their key goal of creating real financial incentives, through share price performance, for firms to pursue climate change mitigation. It does so by theoretically assessing the two main assumptions which underpin investor environmentalism as promoted by SRI funds and NGOs such as the Carbon Disclosure Project: those concerning the power of institutional investors, and the "“business case"” for climate change mitigation. In doing so, it argues that the potential of using institutional investors to create real financial incentives for climate change mitigation, in the form of share price performance, has been considerably overestimated and that there is not even a strong theoretical case for why carbon disclosure should work in this regard. This is argued based on the structural constraints faced by most institutional investors, as well as the fundamentally incorrect assumption about climate change, that it is a form of market failure, which theoretically underpins these initiatives. (c)© 2011 by the Massachusetts Institute of Technology.
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Persistent link: http://EconPapers.repec.org/RePEc:tpr:glenvp:v:11:y:2011:i:2:p:98-119
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