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Abstract
The mere marketing of firms as environmentally friendly does not mean that the firms are genuinely green. In this paper, we propose a new measure, Green Score, to capture firms’ investment in green human capital based on the concentration of green skills required in firms’ job postings. First, we find that firms that increase their Green Score have higher future profitability. Second, firms that increase their Green Score generate more green patents, and those green patents are of higher quality and receive more citations. Third, traditional ratings widely used to evaluate firms’ environmental efforts do not consider firms’ Green Score. Overall, our new action-based measure is simpler and less subjective and it offers a larger time-series variation than traditional disclosure-based environmental ratings.
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