Green new hiring

Abstract

<jats:title>Abstract</jats:title><jats:p>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, <jats:italic>Green Score</jats:italic>, 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 <jats:italic>Green Score</jats:italic> have higher future profitability. Second, firms that increase their <jats:italic>Green Score</jats:italic> 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’ <jats:italic>Green Score</jats:italic>. 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.</jats:p>