Firms and Societal Challenges

Firms are central actors in the transition toward a sustainable economy. They innovate, allocate resources, and create jobs – but also contribute to major challenges such as climate change, inequality, and the ethical use of technology. This research cluster explores how firms can balance profitability with environmental and social goals, and adapt to structural transformations such as the green transition.

1. How do firms adapt and shape the green transition?
We examine how firms adjust their production, investment, and financing decisions in response to climate policy, energy price shocks, and stakeholder demand for sustainability. For instance, how do companies decarbonize supply chains? What constraints limit green innovation, and how do market structure and financial frictions shape the pace of transition?

2. Why do firms behave prosocially?
Some firms actively reduce emissions, invest in cleaner processes, or improve labor and social standards, even beyond regulatory requirements. We explore the incentives and constraints behind these behaviors: e.g. taxation, carbon pricing, investor activism, NGO pressure, and internal governance norms. How do transparency, disclosure, and consumer information foster accountability?

3. What are the social and environmental consequences of firms’ choices?
When firms automate or switch to greener production, they alter skill demand, reshape regional specialization and impact health and environmental quality of local communities. Governance and accountability play a role here too: firms with strong oversight may prioritize fair transitions, retraining, and community engagement. We study how corporate strategies and governance can reduce inequality and support sustainable regional development.

4. How can policy steer firms toward sustainable growth?
We study how policy can reshape firms’ incentives toward sustainable outcomes. Policy instruments include carbon markets, tax incentives, financial regulation, and fiscal/monetary tools. Which policy instruments most effectively mobilize private capital for sustainable growth and promote an inclusive transition for workers, regions, and communities?

Team (TBC)
• Valentina Bosetti (Department of Economics)
• Francesco Decarolis (Department of Economics)
• Michele Fioretti (Department of Economics)
• Luigi Iovino (Department of Economics)
• Clément Mazet-Sonilhac (Department of Finance)
• Matthias Rodemeier (Department of Finance)
• Julien Sauvagnat (Department of Finance)  
• Martin Gunter Kornejew (Department of Finance)