This is how investors can really help mitigate climate change

By Trey Thoelcke Published Jul 7, 10:51AM EDT

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This is how investors can really help mitigate climate change — © franckreporter / Getty Images

By David Callaway, Callaway Climate Insights

Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.

CHAPEL HILL, N.C. (Callaway Climate Insights) — Embedded in the markets may be a solution that goes a long way toward solving climate change’s intractable free-rider problem.

That’s the surprising conclusion of a study that has been accepted for publication at the Journal of Political Economy. Titled Exit vs. Voice, its authors are Eleonora Broccardo of Italy’s University of Trento, Oliver Hart of Harvard University, and Luigi Zingales of the University of Chicago.

The free rider problem is well known, but it’s still worth reviewing the challenge it poses. The benefits of keeping the climate from overheating will be shared by all of us, regardless of whether we have paid our share of the cost of cooling. So individuals have an incentive to wait for others to take the lead, even when they know that the cost of mitigating climate change will be far less than letting the globe overheat—and that the longer we wait the costlier the solution.

The professors’ response is elegantly simple, at least for publicly-traded corporations that are not dominated by a few large shareholders and which don’t have restrictions on shareholder voting: What’s needed is for a majority of investors to even be slightly socially responsible and for them to make their wishes known to corporate management through shareholder voting…

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About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.