Voluntary environmental programs (VEPs) have gained popularity in recent times as stakeholders strengthen pressure on private firms to address the climate crisis. In this article, I analyze a type of VEP with increasing importance within the private sector: environmental coalitions. Focusing on US publicly traded firms, I show that the firms that join a green coalition are greener than others and that they were also greener before becoming members. I apply a difference-in-differences design, using the fact that different firms became members at different points in time, and find no effect of membership on different measures of environmental performance. Why, then, do firms incur the costs of creating and maintaining these coalitions? I show that shareholder pressure, in particular from liberal and active individual shareholders, can explain this behavior. Taken together, the findings suggest that membership in a green coalition can be a tool for firms to signal their environmental credentials when faced with pressure from pro-environmental stakeholders.
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