Religion and the Perception of Climate Change Risk

[Purpose]Prior research has demonstrated that religion can influence a firm’s strategic decisions (Longenecker et al. 2004；Dyreng et al. 2012). In recent years, firms have faced growing pressure from stakeholders to establish sustainable supply chains due to increasing concerns about climate－related risks. Building on this existing literature, this study investigates how the level of religiosity in the region where a firm is located affects its perception of climate change risk.
[Methodology]I measure the level of religiosity by calculating the ratio of religious adherents to the total population in the county where a firm is headquartered. This measure is further broken down by examining adherence to Protestantism and Catholicism, following the methodology used in previous studies (Hilary and Hui, 2009；Boone et al. 2013).
[Findings]I find that firms headquartered in regions with higher levels of religiosity tend to perceive greater risks associated with climate change compared to those in less religious areas. Furthermore, I identify that market concentration and CEOs nearing retirement negatively impact the relationship between religiosity and the perception of climate change risk. These findings are robust across various model specifications, including the use of a propensity score matching and entropy balancing, and other methodologies.
[Implications]This research contributes valuable insights to the economic and business literature by explaining the influence of religiosity on the perceived risk of climate change.