Public Policy and Private-Sector Prosocial Motives: The Case of Greenhouse Gas Emissions

Abstract

This paper examines how the effectiveness of public policies in promoting corporate prosocial behaviour depends on their interactions with private-sector intrinsic motives. I use the adoption of greenhouse gas reduction targets in some U.S. states as a natural experiment. Comparing firms in adopting and non-adopting states, I find that the former face reduced shareholder pressure to cut emissions after policy adoption, as reflected in fewer emission-related shareholder proposals and lower voting support. Furthermore, I find no evidence that these policies reduce corporate emissions. These findings suggest that, under certain circumstances, public interventions can inadvertently crowd out private-sector prosocial efforts, undermining their intended effects.

Keywords: Prosocial motives, Public policy, Shareholder engagement, GHG emissions, Corporate social responsibility, Average treatment effect