The Role of Sustainable Management Practices in the Transition of Corporates Towards Net-Zero

88 Pages Posted: 30 Apr 2024

See all articles by Niklas Gehrke

Niklas Gehrke

Climate & Company

Malte Hessenius

Climate & Company

Raphael Tietmeyer

Climate & Company

Date Written: April 22, 2024

Abstract

Although many firms seek to demonstrate carbon emissions reduction efforts in response to investor concerns about climate change, the lack of standardized metrics can deter support for carbon-intensive activities transitioning to climate neutrality. This research uses a global panel data set of publicly listed firms exploiting within-variation to assess sustainable management practices and their impact on corporate carbon performance. One main finding is that firms with a science-based target achieve 4% to 15% lower carbon emissions. In contrast, other indicators like green expenditure and monetary incentives related to climate change show no robust association with carbon emissions reduction. Using the staggered difference-in-differences approach introduced by Callaway and Sant’Anna (2021) to accommodate heterogeneous treatment effects and relax the parallel trends assumption, these results remain robust. Moreover, firms with transition plans achieve approximately 7% lower emissions in this specification. Furthermore, the study extends its analysis to a subset of transition sector firms, yielding similar outcomes. For an aggregation of indicators, only combining green expenditure and science-based targets is linked to lower corporate emissions.

Suggested Citation

Gehrke, Niklas and Hessenius, Malte and Tietmeyer, Raphael, The Role of Sustainable Management Practices in the Transition of Corporates Towards Net-Zero (April 22, 2024). Available at SSRN: https://ssrn.com/abstract=4803529 or http://dx.doi.org/10.2139/ssrn.4803529

Niklas Gehrke (Contact Author)

Climate & Company ( email )

Ahornallee 2
Berlin, 12623
Germany

Malte Hessenius

Climate & Company ( email )

Ahornallee 2
Berlin, 12623
Germany

Raphael Tietmeyer

Climate & Company ( email )

Ahornallee 2
Berlin

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