Abstract Business interests have often stymied progress on climate policy, raising the question of the source of business opposition to decarbonization policy. We bring intertemporal trade-offs into the study of business and climate change to build new theory on the relationship between firm ownership and policy opposition. Climate policy confronts companies with an intertemporal trade-off: incur costs today for gains in the future. Firms with short-term owners face pressure to maximize short-term profits, making them unable to undertake this trade-off. They therefore oppose climate policy. We test our argument using a dataset of US firms and an original firm-level measure of climate policy opposition. Firms most exposed to short-term capital oppose policy more than observably similar firms with long-term ownership. Our theory develops the microfoundations of long-term policy making. The greater an economy’s exposure to impatient capital, the more business opposition policy makers are likely to face in adopting long-term policies.
Finnegan et al. (2026) studied this question.