Beyond the Classroom: Learning from research on ESG policies
Recently, I have fallen down a rabbit hole questioning environmental regulations. Like many business students throughout the world interested in social impact, I had heard about sustainability and environmental measures, yet I wanted to learn more. I found myself drawn to one of the most fascinating tensions in modern business: the gap between what companies promise and what they do when it comes to sustainability.
Over the past few decades, Environmental, Social, and Governance (ESG) policies have become the dominant framework through which businesses signal their commitment to the planet. But as I dug deeper, I kept running into the same uncomfortable question – are these commitments real or are they just tools for marketing?
Green or Greenwashing?
I came across the concept of greenwashing, the idea that companies dress up their public image with environmental promises they never intend to keep. Critics accuse companies of using ESG targets as little more than marketing tools. They also claim that companies rarely ever follow through on their goals. This wasn’t just speculation from cynics. In his research, UC Berkeley Haas Assistant Professor of Accounting Shawn Kim found that companies often fail to meet their ESG targets or quietly remove their targets. That finding stopped me in my tracks.
He introduced me to the concept of climate alliances, where groups of companies within the same industry band together to make joint commitments toward net zero emissions. On the surface, this sounds like a powerful idea. Collective action, shared accountability, industry-wide change. But the more I looked, the more complicated it got.
Professor Kim, working alongside Professor Shirley Lu of Harvard Business School, published a working paper, Are Industry Climate Alliances Cartels? Their research focused specifically on the airline industry, which turned out to be an ideal testing ground because of the transparency of pricing data and the ability to measure real environmental outcomes.
Using research to measure impacts
Over the past few years, regulatory leaders have suggested these alliances could be used for collusion between corporations, which is expressly illegal under the Sherman Antitrust Act. Two House of Representatives Judiciary Committee staff reports expressed concerns about these climate alliances, with distrust between regulators and the industries.
“There were two purposes to our research, the first was to see whether these alliances were engaging in anti-competitive behavior, and the second was to see if they are successful in achieving net zero emissions,” Professor Kim stated.
The findings from Professors Kim and Lu gave me a lot to process. After examining market and environmental outcomes before and after airlines made joint carbon commitments and comparing member versus non-member airlines on pricing — they found no evidence of collusion. That was reassuring.
Surprisingly, however, they also found no meaningful improvement in emissions among the participating airlines in the near term. Professor Kim described these as “Cheap Talk” alliances — neither harmful in an antitrust sense, nor effective at what they claim to do.
So, these alliances aren’t secret cartels. But they also aren’t saving the planet. That’s a strange and sobering middle ground.
Business decisions and regulatory uncertainty
Legal frameworks, antitrust concerns, measurement gaps, and political pressures all shape what companies can and cannot do, sometimes more than their intentions ever could.
Why aren’t these alliances working? This was the question I most wanted to answer. The explanation Professor Kim offered pointed back to the very legal ambiguity I had just learned about. Because the line between permissible climate collaboration and illegal anticompetitive behavior is so blurry, companies may be pulling back from meaningful cooperation out of legal caution. You can’t effectively collaborate if you’re afraid that collaboration itself might land you in court.
This helped me understand why climate alliances have been declining in recent years, and why those that remain may exist more for optics than outcomes.
Thankfully, the picture isn’t entirely bleak, and I think that nuance is important when studying regulation. There are some positive signals — airlines have ramped up lobbying for sustainable aviation fuel and research into greener alternatives has grown. And the collapse of the Net Zero Banking Alliance demonstrates just how critical policymakers and regulators are to success of such initiatives.
These details reminded me that regulatory environments vary across industries and regions. The European Commission, for instance, operates with somewhat clearer guidelines on how antitrust laws apply to sustainability-related agreements than the U.S., which may allow for more productive collaboration there.
By the end of my research into this topic, a clear takeaway emerged: the biggest barrier to effective climate alliances is regulatory uncertainty. Professor Kim put it plainly — if firms understood exactly what kinds of collaboration were legally acceptable, they could find better, more meaningful ways to work together on sustainability. Better external verification of emissions data would also help hold companies accountable in ways that self-reporting never can.
As Professor Kim put it, “We are in a situation where it is unclear for everyone — unclear for firms, unclear for regulators as well.” For anyone trying to understand how environmental policy functions in the corporate world, that uncertainty is perhaps the most important thing to grasp — and the most urgent thing to fix.
Coming into this as a curious Haas student interested in social impact, I assumed that corporate environmental regulation was primarily a story about willpower, whether companies cared about the planet. What I discovered is that it’s far more structural than that. Legal frameworks, antitrust concerns, measurement gaps, and political pressures all shape what companies can and cannot do, sometimes more than their intentions ever could.
