Allowing shareholders to be held liable for the damages that companies cause to the environment and people could help transform the world’s energy system towards sustainability, according to new research published today inProceedings of the National Academy of Sciences (PNAS).
The research carried out at IIASA in collaboration with the Potsdam Institute for Climate Impact Research demonstrates that there is fundamental rigidity, known as lock-in, within the energy economy that favors the use of fossil fuels and nuclear power despite their large environmental and social costs. The researchers identify that this rigidity of the existing energy economy could be considerably reduced by introducing new rules that hold shareholders of companies liable for the damages caused by the companies they own. Allocating the liability between the company and its shareholders could spur a shift toward a sustainable energy system.
“The world’s energy system today relies heavily on fossil fuels and uranium, and its output regularly causes damage to the environment in the form of pollution, oil spills, or nuclear leaks,” says Jérôme Dangerman, lead author of the study and Research Scholar at IIASA at the time of writing the article.
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