Determinants of Corporate Carbon Reduction Targets
27 Pages Posted: 7 May 2014
Date Written: May 5, 2014
We investigate alternative hypotheses for a company’s choice for an intensity-only (carbon emissions relative to sales, production, etc.) versus an absolute carbon emissions goal. The hypotheses include: (1) a high growth firm hypothesis whereby high growth companies select an intensity goal, to continue to grow without an absolute emission reduction; (2) a high emissions industrial sector hypothesis where firms in industries with large carbon emissions prefer an intensity goal that is easier to reach; (3) a green window dressing hypothesis whereby firms tied to consumer acceptance select an easier to meet intensity target. Utilizing maximum likelihood logit regressions, we find a higher likelihood for firms with high growth potential, in high emission industries, and in the consumer eye to use easier to meet intensity versus absolute reduction goals. Firms with stronger brands, however, are associated with more transparent, absolute emission targets.
Keywords: Environmental Accounting, Carbon Reduction Targets, Global Warming
JEL Classification: Q56, Q54, M14
Suggested Citation: Suggested Citation