Companies that perceive high climate change risks are significantly less likely to steal wages from their employees.
April 1, 2026
Original Paper
Working Amid Climate Uncertainties: The Disciplining Effect of Climate Risk on Employee Treatment
SSRN · 6504054
The Takeaway
One might expect firms facing environmental pressure to cut labor costs, but climate risk actually acts as a disciplining force. Firms treat workers better because they realize maintaining a skilled and loyal workforce is essential for surviving future climate-driven economic shocks.
From the abstract
In examining how firm-level climate risk influences wage theft, a major form of employee mistreatment, we document that wage theft is less prevalent in firms with high climate risk perception. To establish causality, we employ difference-in-differences analysis around the adoption of the Paris Agreement and instrumental variable estimation. The negative relation between climate risk and wage theft is more pronounced in labor-intensive firms and those heavily reliant on skilled labor, suggesting