Abstract

http://ssrn.com/abstract=2133004
 


 



Pay for Environmental Performance: The Effect of Incentive Provision on Carbon Emissions


Robert G. Eccles


Harvard Business School

Ioannis Ioannou


London Business School

Shelley Xin Li


Harvard Business School

George Serafeim


Harvard University - Harvard Business School

August 20, 2012

AAA 2013 Management Accounting Section (MAS) Meeting Paper

Abstract:     
An increasing number of companies are striving to reduce their carbon emissions and, as a result, they provide incentives to their employees that are linked to the reduction of carbon emissions. Using both fixed effects models and matching samples, we find evidence that the use of monetary incentives is associated with higher carbon emissions. Moreover, we find that the use of nonmonetary incentives is associated with lower carbon emissions. Consistent with monetary incentives crowding out motivation for prosocial behavior, we find that the effect of monetary incentives on carbon emissions is fully eliminated when these incentives are provided to employees with formally assigned responsibility for environmental performance. Furthermore, by employing a two-stage multinomial logistic model, we provide insights into factors affecting companies’ decisions on incentive provision, as well as documenting that the impact of monetary incentives on carbon emissions remains significant after controlling for potential selection bias.

Number of Pages in PDF File: 49

Keywords: Incentives, monetary, nonmonetary, environment, carbon emissions, pro-social

JEL Classification: M4, M5, M1

working papers series


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Date posted: August 21, 2012 ; Last revised: February 10, 2014

Suggested Citation

Eccles, Robert G. and Ioannou, Ioannis and Li, Shelley Xin and Serafeim, George, Pay for Environmental Performance: The Effect of Incentive Provision on Carbon Emissions (August 20, 2012). AAA 2013 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: http://ssrn.com/abstract=2133004 or http://dx.doi.org/10.2139/ssrn.2133004

Contact Information

Robert G. Eccles
Harvard Business School ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
Ioannis Ioannou
London Business School ( email )
Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
02070008748 (Phone)
HOME PAGE: http://www.london.edu
Xin Li
Harvard Business School ( email )
Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
George Serafeim (Contact Author)
Harvard University - Harvard Business School ( email )
381 Morgan Hall
Boston, MA 02163
United States
HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=15705
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