InvestESG: A multi-agent reinforcement learning benchmark for studying climate investment as a social dilemma

• URL: http://arxiv.org/abs/2411.09856v1
• Date: Fri, 15 Nov 2024 00:31:45 GMT
• Title: InvestESG: A multi-agent reinforcement learning benchmark for studying climate investment as a social dilemma
• Authors: Xiaoxuan Hou, Jiayi Yuan, Joel Z. Leibo, Natasha Jaques,
• Abstract summary: InvestESG is a novel multi-agent reinforcement learning (MARL) benchmark designed to study the impact of ESG disclosure mandates on corporate climate investments. Our experiments show that without ESG-conscious investors with sufficient capital, corporate mitigation efforts remain limited under the disclosure mandate. Providing more information about global climate risks encourages companies to invest more in mitigation, even without investor involvement.
• Score: 8.867831781244575
• License:
• Abstract: InvestESG is a novel multi-agent reinforcement learning (MARL) benchmark designed to study the impact of Environmental, Social, and Governance (ESG) disclosure mandates on corporate climate investments. Supported by both PyTorch and GPU-accelerated JAX framework, the benchmark models an intertemporal social dilemma where companies balance short-term profit losses from climate mitigation efforts and long-term benefits from reducing climate risk, while ESG-conscious investors attempt to influence corporate behavior through their investment decisions. Companies allocate capital across mitigation, greenwashing, and resilience, with varying strategies influencing climate outcomes and investor preferences. Our experiments show that without ESG-conscious investors with sufficient capital, corporate mitigation efforts remain limited under the disclosure mandate. However, when a critical mass of investors prioritizes ESG, corporate cooperation increases, which in turn reduces climate risks and enhances long-term financial stability. Additionally, providing more information about global climate risks encourages companies to invest more in mitigation, even without investor involvement. Our findings align with empirical research using real-world data, highlighting MARL's potential to inform policy by providing insights into large-scale socio-economic challenges through efficient testing of alternative policy and market designs.

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