ICLR2025

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

Xiaoxuan Hou, Jiayi Yuan, Joel Z. Leibo, Natasha Jaques

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 Py-Torch and JAX implementation, 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, in a scalable and hardware-accelerated manner. 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.