The Wharton Climate Center conducts academically rigorous and practically relevant research on topics at the intersection of business, markets, finance, and policy surrounding climate change, energy, and the environment, including the impacts of mispricing of climate risks and opportunities on financial markets and business strategies, how effective environmental policies can correct this mispricing, and environmental ethics. Informed by this research, we offer 10+ courses that MBA and undergraduate students can assemble into the Business, Energy, Environment and Sustainability (BEES) major or concentration, over a dozen co-curricular experiences, four Executive certificate programs, and an expanding array of industry and policy convenings. We advance Wharton’s best-in-class education of current and future leaders, equipping them with the tools, skills, and perspectives needed to navigate a world in which climate risks and opportunities are increasingly material.

Knowledge at Wharton’s

Ripple Effect Podcast

Every day, business scholars answer pressing questions in their research — but what do their insights mean for you? In this podcast, Wharton faculty dive into what inspired their studies and how their findings resonate with the world today. Learn how research insights translate into knowledge you can use, with host Dan Loney.

Featured Research

In the paper Designing More Cost-Effective Trading Markets for Renewable Energy, Arthur van Benthem and co-authors study the design of state-specific renewable energy portfolios standards. The study finds that combining separate state markets into a wider regional market and ramping up interim targets progressively over time can reduce the cost of meeting green energy targets substantially, thereby avoiding escalating costs and preserving the political feasibility of renewable energy standards.

The world is under pressure to deliver on the Paris Agreement and individual countries are enacting policies such as phasing out coal, supporting renewable energy, and taxing aviation. In Overlapping Climate Policies, Arthur van Benthem and co-authors, Grischa Perino and Robert Ritz, show that when such policies overlap with a wider carbon-pricing scheme like the EU ETS, the climate effect of renewable energy subsidies is amplified, but fossil fuel bans and taxes can backfire.

Gas prices continue to climb, surpassing $6/gallon in some U.S. states. For today’s teenage drivers, the reverberations of these price shocks will be felt for years to come. According to a new study, Formative Experiences and the Price of Gasoline, by Chris Severen, a senior economist at the Federal Reserve Bank of Philadelphia, and Arthur van Benthem, Wharton professor of business economics and public policy, oil crises during your formative years shape driving behavior later in life.

Recent explosive growth in environmental and climate-related marketing claims by business firms has raised concerns about whether such claims are real or constitute greenwashing. Sarah E. Light’s research examines the role of government regulators, including financial regulators like the Securities and Exchange Commission, in addressing concerns about greenwashing. In Greenwashing and the First Amendment, Light and co-author Amanda Shanor demonstrate that disclosure requirements, including the SEC’s recent proposed rule requiring disclosure of climate-related risk and emissions information, are consistent with First Amendment doctrines surrounding commercial speech.

Lubos Pastor, Robert Stambaugh, and Luke Taylor show that greener assets have lower expected returns due to investors’ green preferences and green assets’ ability to hedge climate risk. Green assets can nevertheless outperform when climate concerns increase unexpectedly. Their paper Sustainable Investing in Equilibrium recently won the 2021 Fama-DFA Prize for best paper on capital markets and asset pricing at the Journal of Financial Economics.

Rapid decreases in the amount of Arctic sea ice have far-reaching impacts on the global environment and economy. In their paper Probability Assessments of an Ice-Free Arctic: Comparing Statistical and Climate Model Projections, Wharton’s Francis Diebold and Glenn Rudebusch from the Federal Reserve Bank of San Francisco provide statistical forecasts of Arctic sea ice extent for the 21^st century and a probability assessment of the timing of an ice-free Arctic, with results indicating an almost 60 percent chance of an ice-free Arctic Ocean during the 2030s.

With the rampant climate emergency, Wharton’s Eric Orts and Brain Berkey urge businesses, especially carbon majors, to abide by a climate imperative that calls for operating responsibly in a way that limits GHG emissions to a level that is compatible with the recommended global emission limits. This requires revising the traditional profit-maximization approach, which can frequently conflict with the goal of emission reductions even with policy corrections. Their paper, The Climate Imperative for Business, recommends four constructive strategies for businesses to effectively embrace the climate imperative.

Artificial intelligence (AI) has been increasingly applied in supporting climate change projections, but limited work has leveraged AI to address climate change adaptation. In Artificial Intelligence for Climate Change Adaptation, Wharton’s Hamsa Bastani and coauthors So-Min Cheong from the University of Kansas and Kris Sankaran from the University of Wisconsin-Madison identify the gap in AI applications, highlight the value of AI in supporting adaptation choices and implementation, and illustrate how AI can unlock valuable information in scarce-data settings and enable better decision making and tailor adaptation measures.

In a forthcoming article in the American Economic Review, Wharton’s Susanna Berkouwer and co-author Joshua Dean from the University of Chicago investigate the adoption of energy-efficient technologies by low-income households in Kenya. They find that improved cookstoves reduce charcoal usage by 39%, which corresponds to 3.5 tons of CO2e per year (valued at $295 over the two-year lifetime of the stove when using a social cost of carbon of $42) in addition to $237 in private financial savings from reduced fuel expenditures. They identify credit constraints as a major barrier to adoption: demand doubles when participants are offered a 3-month loan to adopt the stove.

For Wharton’s Steven O. Kimbrough, the University of Pennsylvania’s Robin Clark, and co-author Christine Chou, two important research questions arose from the 2010 U.S. Securities and Exchange Commission (SEC) Advisory on climate change reporting: (1) How does the discussion of climate change in SEC filings change after the Advisory? and (2) What are firms talking about when they talk about climate change? In What do firms say in reporting on impacts of climate change? An approach to monitoring ESG actions and environmental policy, they find that firms with comparatively larger transition risks tend to discuss climate change comparatively more, focusing on regulation-related topics. Meanwhile, firms exposed to the physical risks of climate change tend to discuss climate change somewhat less, focusing on meteorological topics.

To mitigate environmental and social harm, policy-makers often provide incentives or impose sanctions to discourage harmful behavior. In Are Bans Effective under Limited Monitoring? Evidence from High Seas Management, Wharton’s Hamsa Bastani and co-author Joann F. de Zegher from the Massachusetts Institute of Technology (MIT) find that a ban on seafood transshipments on the high seas reduces the yearly growth in transshipment rates by an estimated 58% despite significant monitoring challenges, and does not cause appreciable strategic behavior. A difference-in-differences analysis of landing prices suggests that this reduction comes at an estimated cost of 3% higher raw material prices.