Lunch seminar with Erik Voeten
Enforcing the Paris Agreement through Climate Litigation? Evidence from Stock Markets
The absence of legal enforcement mechanisms undermines the credibility of global climate mitigation commitments. Recently, various domestic courts have held governments accountable for their failure to reduce carbon emissions in accordance with their share of the global responsibility. Can such national litigation transform the global climate regime from “soft law” to “hard law” and make mitigation commitments more credible? This paper offers evidence from stock market returns in Europe. Investor beliefs about government mitigation commitments should affect the relative prices of renewable and fossil fuel assets. Judicial decisions aligned with climate goals positively affect stock prices of renewable energy firms but have no significant effect on firms heavily invested in coal or oil and gas. The effect on renewables extends beyond firms located in the country where litigation takes place, suggesting that litigation may affect investor beliefs about policy directions across Europe. Failed climate litigation has no significant effect on asset prices. The null-effect on fossil fuel companies may reflect investor beliefs that these companies can protect their assets by selling them or demanding compensation. These findings highlight both the potential and limits of climate litigation as a global governance tool.
Speaker bio
Erik Voeten's research on the United Nations, the European Union, the European Court of Human Rights and broader issues of international law and cooperation has been published in journals such as the American Political Science Review, the American Journal of Political Science, International Organization, International Studies Quarterly, the Journal of Politics and the Journal of Conflict Resolution. He is the editor-in-chief of the journal International Organization.
His popular writings are primarily on the Washington Post's Monkey Cage: http://www.washingtonpost.com/blogs/monkey-cage/ His new book, Ideology and International Institutions, appeared with Princeton University Press in January 2021.
Meeting ID: 657 4016 2365
Passcode: 661322