Measuring Local Climate Change Attention: Does it Affect Investors and Firms?

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Lin Peng (City University of New York)

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IWH, conference room and via Zoom

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Lin Peng holds the title of Krell Chair Professor of Finance at Baruch College, the City University of New York, where she also serves as the coordinator of the Ph.D. program in Finance and as a liaison of the Academic Female Finance Committee (AFFECT) of the American Finance Association.

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We construct a novel measure of local climate change attention using a comprehensive dataset of newspaper coverage from 2000-2022, encompassing over 5,000 US newspapers. We document an increasing trend in climate attention and growing polarization in climate-related sentiment across the US. Local climate attention, while correlated with national trends, exhibits significant regional variation. It is influenced by local education levels, Democratic party affiliation, and extreme weather events, but not by local greenhouse gas emissions or toxic releases. Exploiting exogenous variation, we find that higher local climate attention is associated with increased individual investment in ESG-focused ETFs and improved environmental performance of local firms. These findings suggest local climate attention significantly influences investment decisions and corporate environmental policies. Read more …