In 2019, two carmakers looked at the same climate rules and reached opposite conclusions. Toyota backed the Trump administration’s effort to loosen fuel standards, while Ford lined up with California to build cleaner trucks. Both companies sold cars. Both faced the same federal government. Yet they spent their money lobbying in opposite directions. What explains that kind of split inside a single industry?
A new study in the American Journal of Political Science offers an answer rooted in how each firm experiences climate change. The researchers argue that a company’s political behavior depends less on whether it belongs to a “dirty” or “clean” industry and more on the specific mix of threats and opportunities it perceives.
A question the usual categories can’t answer
Much of the earlier research on business and climate policy sorted companies into winners and losers. High-polluting firms were expected to resist regulation because compliance raises their costs, while early adopters of cleaner technology were expected to seek an edge over rivals. That framing captures part of the picture, but it treats a firm’s relationship to climate change as one-dimensional.
Christian Baehr, Fiona Bare, and Vincent Heddesheimer, all PhD candidates in the Department of Politics at Princeton University, wanted to look closer. They start from an observation that complicates the winners-and-losers story: a single company can be helped and harmed by climate change at the same time. An automaker might hold factories vulnerable to flooding, face emissions rules that raise its costs, and see fresh demand for electric vehicles, all at once.
To untangle these pressures, the authors separate climate exposure into three kinds. Opportunity exposure describes the chance to expand or create markets, such as demand for low-carbon products. Regulatory exposure describes the expectation that climate policies will affect a firm’s costs, for example through pollution controls. Physical exposure describes vulnerability to the physical effects of a warming planet, such as extreme weather and natural disasters.
Their central claim is that the type of exposure shapes three separate decisions: whether a firm lobbies at all, how much it spends, and which part of the government it approaches. The authors reason that firms weigh the costs and benefits of lobbying based on what motivates them, whether a policy would deliver benefits to them alone or to their whole industry, and how soon any payoff would arrive.
Listening to what executives say on earnings calls
Measuring these pressures is harder than it sounds. Common yardsticks like carbon emissions or environmental scores tend to reflect a company’s past business model rather than its expectations about the future. So the team turned to a different source: quarterly earnings calls.
Publicly traded companies hold these calls to discuss their performance with analysts, journalists, and investors. Because statements made on the calls can be checked later and misleading claims carry legal risk, the authors treat them as a reasonable window into what executives actually perceive. Drawing on a measure developed by financial economists, the researchers counted how often climate-related word pairs tied to opportunity, regulation, and physical risk showed up in the transcripts. The share of such terms in a given call became each firm’s exposure score.
They assembled these scores for 11,705 publicly traded firms from 2001 through 2023, then linked them to federal lobbying records collected under United States disclosure laws. Those records show whether a firm lobbied on climate-related issues in a given quarter, roughly how much it spent, and which government bodies it targeted. Federal lobbying accounts for the majority of United States lobbying spending, and prior research suggests it can shift policy outcomes, which made it the team’s main measure of political behavior.
A key feature of the analysis is that it compares firms to their industry peers rather than across the whole economy. Using statistical models that account for year-to-year shocks within each industry, the authors estimated how a firm’s lobbying changes when its exposure rises above or falls below the level of its direct competitors. This design does not prove strict cause and effect, but the researchers ran a series of checks, including tests for hidden factors and placebo tests on unrelated policy issues, and report that the core patterns held up.
Opportunity talks loudest
The analysis found that firms with greater exposure to climate change, relative to their peers, tend to be more politically active on climate issues. That result held both for the decision to lobby and for the amount spent.
But the three types of exposure did not carry equal weight. Opportunity exposure was the strongest predictor of climate lobbying, followed by regulatory exposure. Physical exposure, by contrast, showed no reliable link to lobbying activity. The authors had expected physical risk to matter less, but they were surprised it barely registered. They suggest that policies addressing floods or severe weather tend to pay off slowly and spread their benefits widely, which makes it harder for any single firm to justify the expense of lobbying.
The size of the effect is illustrated with a comparison drawn from the auto industry. In one model, the researchers estimated that Ford, then investing heavily in electric vehicles, had about a 42 percent chance of lobbying on climate issues in late 2019. When they swapped in Toyota’s lower opportunity exposure for that quarter, the estimated likelihood fell to 34 percent. For a generic firm, moving opportunity exposure from the industry average to two standard deviations above it was associated with roughly a 51 percent jump in the probability of lobbying.
Different worries, different doors
The type of exposure also appeared to steer firms toward different parts of the government. Companies with high opportunity exposure were especially likely to lobby the Department of Energy, which oversees research funding and technology programs that can deliver direct benefits. The pull toward that agency was roughly three times stronger than the pull toward the Environmental Protection Agency.
Firms with regulatory concerns behaved differently. Rather than concentrating on one agency, they spread their efforts across multiple targets, including both the EPA and the Department of Energy. The authors read this as a sign that companies facing regulatory pressure see several avenues for shaping the rules that affect them.
When the researchers tried to sort lobbying into pro-climate and anti-climate directions by looking at business coalition membership, they found suggestive patterns. Physical and opportunity exposure were associated with a tilt toward pro-climate activity, while regulatory exposure appeared to spur both pro- and anti-climate lobbying. The authors caution that coalition membership is an imperfect stand-in for a firm’s actual positions, so these findings should be read as tentative.
The auto industry as a test case
To show how these dynamics play out, the team examined the auto sector in detail, using earnings calls, lobbying reports, and voluntary climate disclosures. Firms further along in electric vehicle production, including Tesla, Ford, and General Motors, tended to support stricter regulations and lobby on charging infrastructure and tax credits. Toyota, which had a smaller share of its future production forecast as electric, lobbied against tighter fuel economy standards and emphasized its hydrogen and fuel-cell strategy instead. The pattern matched the study’s argument that a firm’s relative position, not just its industry, shapes where it stands.
What it suggests, and what it doesn’t
The authors are careful about how far to push their conclusions. Their measure captures how executives perceive climate change, which may not perfectly track a firm’s true exposure. And because the study observes firms rather than running an experiment, it describes associations rather than proven causes, even as the researchers argue their design and robustness checks make omitted factors an unlikely explanation.
Looking ahead, the team offers what they call cautious optimism. If firms lobby more in response to opportunity than to physical risk, then as clean technology keeps advancing, political energy may increasingly flow toward policies that cut emissions. The flip side, they note, is that lobbying to help society adapt to floods, fires, and heat may lag behind, precisely because the payoff from that kind of policy is slow and shared broadly rather than captured by any one company.
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