Announcing IEMS Grants 2024


We are pleased to announce the funding results of IEMS Research Grants 2024.   Out of a total of 18 applications, 6 grants valued at about HKD420,000 were awarded. 


When Disaster Strikes: How Climate Events Influence Employment Preferences

Yue Zheng, Assistant Professor of Accounting, HKUST

Allen Huang, Professor of Accounting, HKUST

Yuqing Zhou, Assistant Professor of Accounting, Chinese University of Hong Kong

Human capital plays an important role in providing firms with a sustained competitive advantage, making it crucial for businesses to understand the factors that influence individuals’ employment decisions. Previous research finds that corporate environmental performance affects employers’ attractiveness to job seekers. In this study, we will investigate how exposure to salient climate events shapes job applicants’ preferences for employers. We argue that personal experience with climate-change related disasters can increase individuals’ climate risk perceptions and their disapproval of environmental irresponsibility. Using climate disaster as a plausibly exogenous shock in individuals’ experience and exploiting a comprehensive database of job postings, we will examine whether it takes longer for environmentally under-performing firms to fill their job vacancies in locations hit by climate hazards. We mitigate endogeneity that arises from firms’ choice in environmental performance with a triple-difference research design, i.e., pre-and post-disaster, in locations that experience the disaster or not, and between firms that perform well or not environmentally. We further investigate the moderating effects of the extent of damages caused by the hazards, employer power in the labour markets, and employer visibility. Finally, we perform additional analyses to address the potential concern that our results are driven by a demand-side shift in firms’ hiring strategies and examine whether climate disasters also change incumbent employees’ perceptions on firms and the likelihood of turnover. Our study advances the literature on the role of non-wage factors in job seekers’ preferences and contributes to the literature on the economic consequences of climate risks.

ESG Commitments in Emerging Economies: Exploring MNEs' Walk towards Decarbonization 

Jiatao Li, Lee Quo Wei Professor of Business and Chair Professor of Management, HKUST

This project aims to examine the impact of global climate change and environmental risks on corporations, with a focus on companies in emerging economies, in particular China. The global surface has experienced a significant increase in temperature during the past decades because of surging carbon emissions. In response, the United Nations has urged individuals, organizations, and governments worldwide to act collectively to cut carbon emissions and achieve carbon neutrality by the middle of this century, which is often known as the “net-zero” initiative. As major economic actors and often the biggest polluters, firms play important roles in the mission of decarbonization. Multinational enterprises (MNEs) in emerging markets often make pledges or commitments concerning their environmental and social practice to establish legitimacy in the international market and gain support from host country stakeholders. However, there is a lack of attention concerning how MNEs implement decarbonization pledges and whether the actual implementation varies across regions. Thus, examining their practices in different regions in response to intensified environmental pressures bears important implications. With progressively stricter carbon regulation, the increased data transparency can help researchers better evaluate firms’ social performance and it also provides a great opportunity to build a centralized dataset on firms’ commitments and actions towards decarbonization. Under this context, the proposed study will investigate MNEs’ walk in response to the net-zero initiative, by addressing the following research question: whether and how firms act differently in their home and host countries in terms of translating their decarbonization pledges into actions. 

Detecting Disasters from Space with Deep Learning

Sangyoon Park, Associate Professor of Social Science, HKUST

Meeyoung Cha, Associate Professor, School of Computing, Korea Advanced Institute of Science and Technology

Jihee Kim, Associate Professor, School of Business and Technology Management, Korea Advanced Institute of Science and Technology

Climate-related disasters, such as typhoons, floods, and tsunamis, are becoming more frequent and intense in scale. It is imperative for governments to be equipped with the capacity to swiftly identify and assess damages caused by such disasters. In this project, we propose an unsupervised damage detection model based on high spatial resolution satellite images and deep learning. One key feature of this model is that it does not extensively rely on existing labelled data and, therefore, can be applied to a broader range of disaster types in various regional contexts. Next, we combine our disaster damage estimates with regional statistical data, which are available from household surveys and population censuses, to investigate spatial variations in the occurrence and intensity of natural disasters across both high- and low-income regions.

Does climate transition credibility matter foreasingcorporate financial constraints? Evidence from the emerging markets 

Keith Chan, Assistant Professor, Division of Environment and Sustainability (ENVR), HKUST

This project proposes to study the empirical relevance of transition “credibility”. The concept is applicable not only to emerging markets, since many companies are increasingly making forward-looking disclosures on their sustainability metrics and targets. This is especially true after the IFRS International Sustainability Standards Board (ISSB) climate disclosures standards came into effect in 2024. What could investors tell apart companies that are willing and capable of actualising their aspirational promises from those that are not? The challenges are exacerbated in emerging markets, where demand for transition finance is high but policy institutions (such as national level net zero commitment and policy enforceability) are often weak. My proposed study sheds light on the importance of corporate sustainability disclosures in lowering the cost of green/transition capital in the emerging market contexts.

The project leverages on the corporate transition capacity framework that I previously developed based on economic theory (Chan et al 2023). The framework has three pillars: transition urgency, transition capacity, and transition plan, and can be operationalized through firm-level ISSB disclosures. In particular, this project empirically investigates (i) how transition credibility, as measured against the theoretical framework, may affect the firms’ access to green capital and, most importantly, (ii) whether the effect is more significant in emerging markets than in developed markets. If it can be shown that green investors may examine firms’ sustainability governance more closely in markets where sustainability-related policy institutions are constrained, the financial market may develop ratings accordingly to assess and prioritize transition financing in emerging markets.

Maritime Transportation in the Greater Bay Area: Analyzing Substitution Impacts and Environmental Outcomes on Road and Rail Traffic

Pengyu Zhu, Associate Professor, Division of Public Policy, HKUST

Amidst rapid urbanization, developing countries grapple with road transportation challenges, notably local traffic congestion, accidents, and a surge in greenhouse gas emissions. Notably, China's response, encompassing significant support for public transport, including subway expansion and rerouting bulk transport to railways and waterways, provides an archetypal framework for policy impact assessment. While evidence points to the beneficial effects of such measures on air quality and CO2 reduction within the context of intra-city rail systems and high-speed rail networks, there exists an evidentiary gap concerning the outcomes of shifting traffic patterns onto new maritime channels. This study, set within South China's dynamically evolving Greater Bay Area (GBA), explores the ramifications of an advanced shipping lane network on the mitigation of road and railway congestion and the amelioration of carbon emissions. Employing a difference-in-difference methodological approach, this research scrutinizes the prospective rechanneling of transportation flows away from terrestrial routes, evaluating the impact on annual traffic and greenhouse gas emissions, against the backdrop of economic, social, and environmental interplays. Building on foundational studies examining rail infrastructure's effect on vehicular movement and pollution indices, our inquiry extends this discourse to the emerging sector of maritime transit. This is a pioneering study of urban logistics, intertwining economic progression with ecological vigilance. By delineating the nuances of maritime advancements, we advocate for a synthesis of robust economic growth and environmental conservation, fostering data-informed transit policies conducive to sustainable development within the GBA and serving as a model for expansive applicability.

Green Pioneers to Green Hands: Is China’s Green Financial Regulation Efficient?

Wen Wang, Asisstant Professor, Divison of Social Science, HKUST

Qi Pan, Assistant Professor of Marketing, Chinese University of Hong Kong

Growing concerns about climate change have prompted numerous countries to implement green financial instruments to promote green innovations and ensure long-term environmental sustainability. However, conditional financial support may unintentionally encourage firms to prioritize high-return green innovations or engage in greenwashing, compromising the overall quality of innovations. This study investigates the impact of China's constraint-based green credit policy on firms' green-patenting, utilizing comprehensive data on firm performance and innovation from 2004 to 2014. Employing a quasi-experimental approach, we analyze firms' innovation activities over an 11-year period, comparing the green innovations and their quality between regulated and unregulated companies. While the policy incentivized green innovations, it resulted in an inefficient allocation of green credits and a decline in the quality of green innovations among regulated firms. A significant shift was observed from first-mover enterprises in green innovations (green pioneers) to follower enterprises in green innovations (green hands), marked by reductions in green patents and declines in green innovation ratios of the former. The policy adversely affected "green pioneers," leading to underperformance in both green and non-green sectors. Our analysis indicates that the shift in innovation quality and sources is primarily due to the policy's vague evaluation criteria for green innovations, with varying effects across different industrial sectors. While regulated labor-intensive industries experienced a significant increase in green innovations at the expense of patent quality, regulated capital-intensive sectors managed to maintain the quality of their green innovations. 


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