Talk green, act brown: Transition risks and drilling investments of U.S. upstream oil and gas firms

Yun Dong Yeo

Corporate Social Responsibility and Environmental Management, 2025, vol. 32, issue 2, 1605-1617

Abstract: This paper explores the relationship between upstream oil and gas firms' proactiveness in addressing climate change transition risks and their drilling investments. We propose that due to limited capabilities to transition to renewable energy, these firms may strategically display proactiveness to greenwash their intentions to increase drilling activities. Leveraging a unique dataset comprising manually collected information on upstream firms' drilling investments, we find empirical evidence supporting our hypotheses. Specifically, firms showing greater proactiveness toward transition risk during earnings calls paradoxically increase their drilling investments. Additionally, high oil prices negatively moderate this relationship by creating a lucrative environment that benefits stakeholders, such as shareholders and investors, and simultaneously alleviates internal resource constraints, thereby reducing the need for greenwashing. This study contributes to the literature by illustrating how firms, under significant societal pressure but lacking transition capabilities, employ greenwashing tactics to obscure their investment activities.

Date: 2025
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https://doi.org/10.1002/csr.3037

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Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:32:y:2025:i:2:p:1605-1617

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