The Wharton Risk Management and Decision Processes Center is excited to join forces with several Wharton research centers and labs to form the Environmental, Social and Governance (ESG) Initiative. The ESG Initiative will expand the boundaries of business research and education to deliver essential insights for academics, students, and industry professionals. Learn more about the ESG Initiative here.

Business, Climate, and Environment Lab

Environmental degradation and climate change may be the largest failures of free private markets that the world has ever observed. Governments and businesses have adopted myriad policies to solve these problems, sometimes with success but frequently with unintended consequences. Business and government will have to work together to solve the most pressing environmental challenges of our time, from climate change to species extinction. The Business, Climate, and Environment Lab supports cutting edge research, provides thought leadership, and brings together stakeholders from academia, government, communities, and the private sector to design smart public and private sector policies related to topics such as climate change, renewable energy, air and water pollution, waste disposal, biodiversity, and deforestation.

Climate Change and Financial Risk

Central Banking and Climate Change: Climate change may pose challenges to the Federal Reserve’s ability to ensure stable prices and maximum employment. To address this, ongoing work aims to provide policymakers with the tools to understand (1) the extent to which climate change poses a risk to financial stability and (2) the role that they can—and should—play to mitigate this risk.

Climate Risk Disclosures: While publicly traded firms in the United States are required to disclose all material risks to investors to ensure well-functioning markets, there is still a degree of uncertainty as to whether and how to disclose risks posed by climate change. Recently, a number of private standards have emerged to provide clarity for firms, but these private standards do not always completely align with one another. To further clarify this picture, we are currently exploring how materiality varies across industries and what regulators can learn from these private governance standards. Ultimately, we aim to provide guidance for companies on their disclosure practices and suggest regulatory changes to policymakers that would promote uniformity in climate risk disclosures. Read the Risk Center Primer on Climate Disclosures here.

Banks, Private Governance, and the Transition to a Low-Carbon Economy: Like central banks and regulatory agencies, banks themselves are taking steps to address environmental issues and promote the transition to a low-carbon economy—something referred to as private environmental governance. For example, major banks in the U.S. and abroad have recently begun to adopt standards to minimize their financial risk from this economic transition and to promote investment in “green” assets. This project will examine the extent and mechanisms of this form of private environmental governance and explore the role that banks can play as quasi-regulators to encourage a smooth transition to a low-carbon economy.

Energy and Environmental Markets

Carbon Trading, Emissions Leakage and Waterbeds: Carbon markets can be effective tools to reduce greenhouse gas emissions, but additional and overlapping climate policies by a subset of states or countries often lead to unintended side effects. This project investigates how policymakers can improve their designs to mitigate these issues and provides them the tools to compare and select between several different policies.

Renewable Energy Markets: Individual U.S. states often incentivize solar energy through renewable energy portfolio standards. This project aims to inform policymakers how to enhance the cost-effectiveness of these portfolio standards through regional integration, by which states combine their targets and allow renewable energy to be generated where it is cheapest.

Insuring Offsets: Since the beginning of 2021, the state of California requires that 50 percent of any offsets used to comply with its cap-and-trade program must be based in the state. Offsets allow firms and other covered entities to reduce their balance sheet of carbon emissions by purchasing the rights to carbon emissions reductions elsewhere—including through the creation or maintenance of ecosystems that sequester carbon. With increasingly severe wildfire seasons in California, however, this raises the question of what to do when these ecosystems are themselves destroyed. In this project, we explore whether insuring offsets is a viable solution to this problem and the benefits of insurance over other potential regulatory or private governance tools. We aim to provide insurance companies and regulators an understanding of how this process would work and give all involved stakeholders more certainty about their obligations.

Decarbonizing the Transportation Sector

Improving Transportation Policy: We are working on a number of projects aimed at informing and improving policy regarding transportation, the largest source of carbon emissions in the United States. We examine the efficacy of U.S. tailpipe standards for local air pollution. We also study how much potential car buyers actually take into account future fuel savings from more efficient cars, with important implications for fuel economy standards. Finally, we examine which factors explain long-run preferences for driving in the first place—and suggest how these preferences might be shaped by potential future policy. Generally, these projects aim to provide legislators with the tools to more quickly and cost-effectively reduce emissions and inform the automotive industry how various policies might impact their bottom line.

Green Growth

The Economics of Planetary Boundaries: To keep the earth stable and avoid crossing key environmental tipping points we need to solve a number of problems—including climate change, biodiversity loss, chemical pollution, and ocean acidification, to name a few. Humanity needs to stay within its “planetary environmental boundaries.” We ask the big questions: Which policies would be necessary to keep humanity within the planet’s safe operating space? Could policies that help one environmental challenge exacerbate another? This project aims to ground the research of the Risk Center and other institutions in a larger, comprehensive framework.

Environmental Policy in Emerging Economies: Emerging markets face increasing pressure on their natural environment and unique challenges in their environmental governance. Given their global importance, we study how effective policy-making in emerging economies must differ from in more developed economies. Specific examples include investigations of (1) the role political incentives and corruption play in these countries’ economic and environmental governance and (2) existing barriers in low-income countries to the adoption of cleaner technologies—and suggestions for how to design a policy to overcome these challenges.

Why Have Forests and the Economy Grown in Europe? The majority of the world’s forests, which provide essential ecosystem services and help sequester a great deal of carbon, are shrinking. However, this does not have to be the case. Satellite data shows that forest cover in Europe has increased over the past century—despite enormous growth in living standards and economic activity. We examine what factors are responsible for this trend and how they might be applied elsewhere—and study the importance of expanding protected nature areas.

Building Climate Resilience

Climate Risk Solutions: In the summer of 2019, researchers from across the university proposed 30 creative solutions aimed at managing climate risks. In honor of the 50th anniversary of Earth Day—and with a looming climate crisis—we also invited Penn students to submit their own climate risk solutions in the spring of 2020.

Risk Transfer for Climate Adaptation: Several interrelated projects are investigating how innovations in insurance and risk transfer can supplement existing policy tools and help promote climate adaptation in communities throughout the US. These innovations, which may require collaboration between public and private-sector actors, have the potential to more equitably and efficiently ensure disaster-struck communities can get back on their feet and lessen their risk moving forward.

Adaptation Blueprint: Adapting to the effects of climate change is a herculean task and will require novel policy approaches, creative new regulatory tools, and visionary planning ideas. Blueprint for Coastal Adaptation: Uniting Design, Economics, and Policy, edited by Carolyn Kousky, Billy Fleming, and Alan M. Berger, published in the spring in 2021, brings together experts in multiple disciplines to develop new policy and planning approaches for the coast.

Climate and Environmental Ethics

Business Ethics and Climate Change: In a series of projects, we will examine the ethical obligations and duties of business firm managers to limit their greenhouse gas emissions and environmental impacts, as well as the duties and obligations of individuals to the environment and to future generations.

Severen, C., & van Benthem, A.A.  Formative Experiences and the Price of Gasoline. Forthcoming in the American Economic Journal: Applied Economics.

Berkey, B. Prospects for an Animal-Friendly Business Ethics. Forthcoming in Animals and Business Ethics (Springer).

Berkouwer, S.B., Biscaye, P.E., Puller, S., & Wolfram, C.D. (2022). Disbursing emergency relief through utilities: Evidence from Ghana. Journal of Development Economics, 102826.

Bhutta, N., & Keys, B. (2022). “Moral Hazard during the Housing Boom: Evidence from Private Mortgage Insurance.” Review of Financial Studies, 35(2): 771–813.

Berkouwer, S., Wolfram, C., Miguel, E., & Hsu, E.  “What does donor conditionality do? Causal evidence from Kenyan electrification.”

McGlinch, J., & Henisz, W. “Reexamining the Win-Win: Relational Capital, Stakeholder Issue Salience, and the Contingent Benefits of Value Based Environmental, Social and Governance (ESG) Strategies.” (Under Review)

Perino, G., Ritz, R.A., & van Benthem, A.A. “Cancelling Carbon in Cap-and-Trade Systems.” Latest draft: February 2022.

Abito J.M., Flores-Golfin, F., van Benthem, A.A. & Vasey, G. “Designing More Cost-Effective Trading Markets for Renewable Energy.” Latest draft: February 2022.

Berkey, B., & Orts, E.W. (2021). The Climate Imperative for Business. California Management Review (Insights/Frontier).

Abito, J.M, Knittel, C.R., Metaxoglou, K., & Trindade, A, “The Role of Output Reallocation and Investment in Coordinating Environmental Markets.” Revise & Resubmit at International Journal of Industrial Organization.

Berkouwer, S., & Dean, J.T. “Credit, attention, and externalities in the adoption of energy efficient technologies by low-income households.” Revise & Resubmit at the American Economic Review.

Perino, G., Ritz, R.A.& van Benthem, A.A. “Understanding Overlapping Policies: Internal Carbon Leakage and the Punctured Waterbed.” Latest draft: December 2021.

Jacobsen, M.R., Sallee, J.M., Shapiro J.S., & van Benthem, A.A. “Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient?” Latest draft: December 2021.

Berkouwer, S., Adkins, J., Hsu, E., Klugman, N., Streff, A., & Wall, A. (2021). What’s reliability without voltage quality? Energy for Growth Hub. November 29.

van Benthem, A.A., Crooks, E., Giglio, S., Schwob, E., & Stroebel, J.C. “Climate Risks, Financial Markets, and the Energy Sector.” Latest draft: October 2021.

Han, J.S., Houde, J.F., van Benthem, A.A. & Abito, J.M. “Agency Frictions and Procurement: New Evidence from U.S. Electricity Restructuring.” Latest draft: August 2021.

Light, S.E., & Skinner, C.P. (2021). Banks and Climate Governance121 Columbia Law Review 1895.

Gillingham, K.T., Houde, S., & van Benthem, A.A. (2021). Consumer myopia in vehicle purchases: evidence from a natural experiment.  American Economic Journal: Economic Policy13(3), 207-38.

Han, J.S., Houde, J.F., van Benthem, A.A. & Abito, J.M. (2021). When Does Regulation Distort Costs? Lessons from Fuel Procurement in US Electricity Generation: Comment.  American Economic Review, 111(4): 1356-1372.

MacDuffie, J.P., & Light. S.E. (2021). EV Turning Point: Momentum Builds for U.S. Electric Vehicle Transition. Yale Environment 360.

Light, S.E. (2021).  National Parks, IncorporatedUniversity of Pennsylvania Law Review, 169, Rev. 33.

Abito, J.M. (2020). Measuring the Welfare Gains from Optimal Incentive Regulation. Review of Economic Studies, 87(5): 2019–2048,

Engström, G., Gars, J., Jaakkola, N., Lindahl, T., Spiro, D., & van Benthem, A.A. (2020).  What Policies Address Both the Coronavirus Crisis and the Climate Crisis? Environmental and Resource Economics 76(4): 789-810.

Wiley, H.J.P., & Kousky, C. (2020).  Speeding Up Post-Disaster Housing Buyouts.  Solutions. 11(3). September.

Bento, A.M., Jacobsen, M.R., Knittel, C.R., & van Benthem, A.A. (2020). Estimating the Costs and Benefits of Fuel Economy Standards. In: M.J. Kotchen, J.H. Stock, and C.D. Wolfram (eds.), Environmental and Energy Policy and the Economy 1.

Berkouwer, S.B. (2020). Electric Heating and the Effects of Temperature on Household Electricity Consumption in South AfricaThe Energy Journal, 41:04

Schneeman, B.O., Lamberton, C., et al. (2020). A National Strategy to Reduce Food Waste at the Consumer Level. National Academies of Sciences, Engineering, and Medicine. Washington, DC: The National Academies Press.

Jacobsen, M.R., Knittel, C.R., Sallee J.M., & van Benthem, A.A. (2020). The Use of Regression Statistics to Analyze Imperfect Pricing PoliciesJournal of Political Economy 128(5).

Kunreuther, H. & Slovic, P. (2020). What the Coronavirus Curve Teaches Us About Climate Change. Politico Magazine. March.

The Risk Center’s Business, Climate, and Environment Lab aims to centralize Wharton’s research and teaching on business, climate and the environment and acts as a go-to place for these topics at Wharton. See below for examples of how the Risk Center is building out research, education, and student engagement on climate and environment at the Wharton School and the University of Pennsylvania.


Climate and Sustainability Research Faculty Grant Awardees 2021 – The Risk Center’s Business, Climate, and Environment Lab and Disaster Risk Management Lab issued a joint call in Spring 2021 for faculty research proposals on climate and sustainability.

Wharton Climate Prof 2021 – Hear from ten Wharton scholars who each presented their cutting-edge research on climate and business in five minutes or less during this special event, which took place during Penn’s Climate Week (September 2021).

Student Education and Engagement

Business, Energy, Environment, and Sustainability (BEES) – The Business, Climate, and Environment Lab supports the Wharton undergraduate concentration and MBA major in BEES, as well as the MBA-Master of Environmental Studies Dual Degree.

Education webpage – Visit our Education landing page to learn about student research opportunities through the Risk Center, as well as environmental resources across Penn.

Student Newsletter – Sign up for our student newsletter to receive updates about upcoming Risk Center events and opportunities.  Additionally, the newsletter alerts students to other postings, including Penn and partner events, grant and funding opportunities, conferences, and internship opportunities.  Student groups and others are welcome to submit content to Helen Wiley at

Please see below for an overview of various types of events we have hosted in the past:

Climate Change and the Transition to a Carbon-free Economy: Managing Risks and Harnessing Opportunities, Risk Center Annual Workshop December 2021 – This conference featured panels on the intersection of climate change and financial markets and the financial system, the housing market, insurance markets, and emerging markets for renewable energy finance and carbon credits.

Careers Panel: The Future of Business and Climate, November 2021 – The Risk Center invited Penn students to hear a discussion with Wharton alumni who have experience working in energy storage, real estate, infrastructure, transportation, and smart home technology & insurance.

Tackling the Climate Crisis, October 2021 – Hosted by Dean Erika James as part of Wharton’s Beyond Business Series, this virtual event discussed how businesses should evaluate their environmental footprint.

Wharton Alumni Climate Change Conference, October 2021 – The Risk Center co-hosted a four-day virtual conference with the Wharton Club of the National Capital Region.  Topics focused on climate change adaptation, mitigation, restoration, and investment opportunities.

Wharton Climate Prof. September 2021 – Inspired by “Iron Chef” and Wharton’s own “Iron Prof” events, our “Wharton Climate Prof” took place during Penn’s Climate Week 2021 to showcase the climate-related research of Wharton faculty. Please check out the recordings to hear from ten Wharton scholars who each presented their cutting-edge research on climate and business in five minutes or less.

Northeast Workshop on Environmental Economics and Energy Policy, June 2021 – Co-hosted with the Kleinman Center for Energy Policy, this workshop featured papers on a variety of topics, reflecting the latest advances in energy and environmental economics.

Conversations about Climate Change and Insurance, Summer 2021 Webinar Series – Topics ranged from the insurability of climate perils and the impacts on housing markets, to innovative new risk transfer approaches.

Please visit the Risk Center’s videos page for additional recorded events page.

Affiliated Faculty in the News

April 26, 2022. Poets and Quants. For This Wharton Course, The Outdoors Is The Classroom. Sarah Light and Erica Montemayor, director of Wharton Leadership Ventures, discuss their new undergraduate course.

April 27, 2022. The Hill. Cut the root of Russia’s power by making a clean energy transition. Op-Ed by Eric Orts.

 The Materiality of ESG Factors

Sarah E. Light, Witold Henisz, and other Wharton Professors now offer a course on ESG and Climate Change on Cousera.

Energy Economics & Finance Seminar

This seminar series is jointly organized between the Business Economics and Public Policy Department, the Kleinman Center for Energy Policy, and the Wharton Risk Center’s BCE Lab. The scope of the seminar includes regulation and policy for energy, environmental, and transportation issues. View the schedule here.

Contributing Wharton Scholars:

Arthur A. van Benthem, Associate Professor of Business Economics & Public Policy, and Sarah E. Light, Associate Professor of Legal Studies & Business Ethics, are the faculty members responsible for leading the Business, Climate, and Environment Lab.

In response to a call for research proposals during the spring of 2021, five Wharton faculty members of this lab and the Disaster Risk Management Lab were awarded grants for research related to climate and sustainability issues. Read about the awardees and their projects here.

Arthur van Benthem (1)

Arthur van Benthem

Associate Professor of Business Economics and Public Policy

Research Areas: Energy Policy; Environmental Policy; Transportation Policy


Sarah E. Light

Associate Professor of Legal Studies & Business Ethics

Research Areas: Climate Law & Policy; Environmental Law & Policy; Private Environmental Governance

Mike Abito (2)

Jose Miguel (Mike) Abito

Assistant Professor of Business Economics & Public Policy

Research Areas: Industrial Organization; Regulation; Environmental Economics

Brian Berkey

Brian Berkey

Assistant Professor of Legal Studies & Business Ethics

Research Areas: Climate Ethics; Climate Justice; Animal Ethics


Susanna Berkouwer

Assistant Professor in Business Economics & Public Policy

Research Areas: Development Economics; Environmental Economics

Wit 3 (3)

Witold Henisz

Deloitte & Touche Professor of Management

Research Areas: Climate Risk Disclosure; Materiality & Management of ESG Factors

Ben Keys

Benjamin Keys

Rowan Family Foundation Professor of Real Estate

Research Areas: Property Markets; Housing Markets; Mortgage Markets


Steven Kimbrough

Professor of Operations, Information, and Decisions

Research Areas: Risk & Uncertainty; Deep Decarbonation Pathways; Market Design

Carolyn Kousky

Carolyn Kousky

Executive Director, Wharton Risk Management Center

Research Areas: Disaster Insurance; Natural Disaster Policy; Climate Adaptation

Howard Kunreuther

Howard Kunreuther

Co-Director Emeritus and Senior Fellow, Wharton Risk Management Center

Research Areas: Disaster Insurance; Communication of Climate Risks; Climate Change Policy

Cait Lamberton

Cait Lamberton

Duran President’s Distinguished Professor of Marketing

Research areas: Consumer Psychology; Financial Decision Making; Risk Management

John Paul MacDuffie1

John Paul MacDuffie

Professor of Management, Management Department

Research Areas: Vehicle & Mobility Innovations; Urban Transportation; Environmental Law & Policy

canva-photo-editor-15-qer5o8 (2)

Eric W. Orts

Guardsmark Professor of Legal Studies; Management

Research Areas: Environmental Law and Policy; Environmental Management & Governance

Contributing Doctoral Students:

Lauren Kaufmann

Lauren Kaufmann

Legal Studies and Business Ethics

Research areas: Social and environmental impact investing; Business ethics; Business & society

Prakash Mishra

Prakash Mishra

Applied Economics

Research Areas: Land use and transportation economics.

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Philip Mulder

Applied Economics

Research Areas: Public economics and environmental risks and climate change in urban environments.