Family Ownership and Carbon Emissions

Abstract

This study examines the relationship between family ownership and carbon emissions using a large cross-country dataset comprising 6,610 non-financial companies over the period 2010-2019. We document that family firms display lower carbon emissions, both direct and indirect, when compared to non-family firms, suggesting a higher commitment to environmental protection by family owners. We show that this differential effect started following the 2015 Paris Agreement. Differences in governance structure, familial values, and higher spendings in R&D partly explain our results. Paradoxically, we find that family-owned firms and family CEOs commit less publicly to a reduction in their carbon emissions and have lower ESG scores, although polluting less. This suggests a lower participation in the public display of such an outcome and a lower tendency to greenwashing.

Keywords: carbon emission, ESG, governance, family firms, greenwashing, climate change

JEL Classification: G3, G38, M14