Zicklin Insights

Zicklin Professor Spearheads Baruch’s Inaugural Climate Change Conference

Lin Peng, PhD, David Krell Chair in Finance at the Zicklin School of Business, returned recently from a visiting professorship at the University of Cambridge in England with an idea. Hearing her Cambridge counterparts from different disciplines talk about their diverse research interests had sparked the desire to create a similar exchange revolving around her own longtime interest in climate change.  

 “I’m passionate about climate and the environment,” Dr. Peng says. “I wanted to create a multidisciplinary venue where scholars across Baruch who are interested in this topic could share ideas and collaborate on their work.”  

Peng approached Fenwick Huss, PhD, the recently retired dean of the Zicklin School, who gave her his blessing, along with the funding to launch a symposium on the topic. The conference, called “Baruch As a Climate Change Hub,” will take place on March 10, 2023, and showcase interdisciplinary work by faculty across the College as well as local thought leaders.  

Peng’s research focuses on how environmental, social, and corporate governance (ESG) factors impact the decisions made by corporations and investors. One of her papers examines ESG-linked pay, which involves the use of non-financial measures such as CO2 emission targets, product quality, customer satisfaction, and employee satisfaction in executive remuneration contracts. The concept for this research project was inspired by a grant supported by the United Nations’ Principles for Responsible Investment, a globally recognized network of financial institutions working to promote sustainable investment.  

ESG-linked pay is an essential tool for incentivizing executives to prioritize ESG factors and long-term sustainability. However, the effectiveness of these contracts and their impact on firms’ financial performance is a highly debated topic. Peng collaborated with coauthors Sonali Hazarika, associate professor of finance at the Zicklin School; Zicklin alum Aditya Kashikar (PhD, ’20); Columbia professor Ailsa Röell; and Yao Shen, Zicklin assistant professor of finance, to shed light on this debate. Together, they conducted a study of nearly 3,000 firms across 59 countries and found that over the past decade, the number of firms adopting ESG-linked pay contracts for their executives had increased significantly, from 3% to 20%.  

These contracts are particularly prevalent in emission-intensive industries, with adoption rates of 46% to 65% for utilities, oil and petroleum, and mining.  The team also found a positive correlation between a company’s adoption of ESG-linked pay and its ESG and financial performance. “This is a promising sign that a well-designed incentive can achieve a win-win situation that benefits both the shareholders and society at large,” Peng says. “However, there is likely no one-size-fits-all formula for such contracts, and more future research is needed.” 

The climate conference is co-organized by Mindy Engle-Friedman, PhD, Professor of Psychology at Baruch’s Weissman School of Arts and Sciences. Dr. Engle-Friedman has served as chair of Baruch’s Task Force on Sustainability for the last 20 years and has served as chair for last 10 years of the Baruch Climate Action Collaborative (BCAC), a multidisciplinary faculty group of 15 Baruch climate scientists, researchers, and educators across Baruch’s three schools.  

Engle-Friedman and Peng first joined forces on the subject back in 2021, when Peng was invited by Engle-Friedman to moderate a panel discussion for the Weissman School’s ‘We Are Climate Action’ speaker series. 

“Lin has a wonderful relationship with corporate America and was a terrific moderator,” Engle-Friedman says. “The two of us realized there were a multitude of opportunities for climate change collaboration at Baruch.”  

With the faculty members of the BCAC, Engle-Friedman spearheads Baruch’s highly successful Climate Scholars Program, which prepares undergraduates for leadership roles in climate-related positions; the program recently expanded to include three more CUNY schools.  

The College is committed to furthering research on climate change, President S. David Wu said last year at a discussion on climate activism held at Baruch College and sponsored by the UN Development Program.