Climate Change and Human Resource Management

The Stern-Stiglitz Report on carbon pricing emphasizes that climate policy must not only cope with market failures, but also with government and organizational failures. Focusing on the latter, this paper investigates how several human resource management devices - incentive compensation, performance appraisal, employee empowerment, organizational structure, outsourcing and training - can be jointly deployed to direct managerial attention adequately. Our static principal-agent model delivers predictions/prescriptions on how these devices should adjust, with some qualifications concerning notably the procurement of environmental services and employee training, as the business stakes in climate change increase