It sounds crazy, but one company successfully 'going green' can actually cause total global carbon emissions to go up.
This research identifies a 'waterbed effect' where firm-specific climate wins simply shift production or emissions to less-regulated competitors. It demonstrates that without universal carbon pricing, shareholder 'stewardship' and ESG initiatives can be counterproductive, effectively squeezing one part of the mattress and causing another to bulge.
Systematic Stewardship on the Waterbed
SSRN · 6465924
<div> This paper examines the limits of corporate governance as a tool for advancing climate <span>transition. While capital market mechanisms, shareholder stewardship, say-on-climate votes, </span><span>and ESG-linked executive compensation are often presented as effective levers for greening </span><span>corporate behavior, their transformative capacity is systematically constrained. Building </span><span>on insights from financial economics and agency theory, the paper highlights incentive di