Tackling climate change generates non-rivalrous and non-excludable benefits, while the costs of climate action fall on individual firms. This should incentivize firms to free ride on each others’ efforts. Yet, corporate lobbying on climate issues has increased steadily across sectors. We develop a framework where exposure to climate disasters reduces free-riding by aligning private incentives with collective good. Disasters update firms’ perception of future costs, risk likelihood, and discount rates, motivating present-day action. Ownership and production networks amplify this effect by making costs measurable, concentrated, and attributable to a few firms. Supplier substitutability, however, limits the diffusion of action. Using a comprehensive dataset linking U.S. firms, domestic subsidiaries, and supply chain partners to environmental lobbying, we find that disasters affecting firms or their subsidiaries increase lobbying, while disasters impacting suppliers matter only when alternatives are scarce. These results highlight spatial and structural factors shaping climate action in multi-unit, networked firms.
Moderator: Sarah Bauerle Danzman