Green New Hiring
Not all green jobs are created equal. Some jobs are more green than others.
Darendeli, A., Law, K. K. F., and Shen, M. (2022). Green new hiring. Review of Accounting Studies, 27(3), 986-1037.
Key takeaways:
The research study introduces a novel measure called Green Score, which captures a firm’s investment in green human capital by analyzing the concentration of green skills required in their job postings. This measure is simpler, more objective, and provides more time-series variation compared to traditional environmental ratings.
Companies that increase their Green Score exhibit higher future profitability and generate more high-quality green patents. This suggests that investing in green human capital can lead to better financial performance and more innovative environmentally-friendly products.
Conventional ratings like KLD do not account for a firm’s Green Score when assessing their environmental efforts. Moreover, firms tend to increase their Green Score gradually in response to negative environmental events rather than taking a proactive approach.
Hiring employees with green skills comes at a higher cost for companies, with the salary premium determined by the job’s nature and the number of green skills required. Green Score can be used to identify firms that engage in greenwashing by misleading stakeholders about their environmental commitments.
