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Do corporate sustainability initiatives improve corporate carbon performance? Evidence from European firms

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  • Faizul Haque
  • Collins G. Ntim

Abstract

We contribute to the business strategy and the environment literature by investigating the influence of corporate sustainability initiatives and corporate carbon performance of European listed firms. We use three‐way fixed‐effects model, and our sample comprises of 2444 firm‐year observations from 12 European countries, covering a 16‐year period (2004–2019). First, we find that corporate sustainability initiatives, a composite measure comprising of emission reduction initiatives, environmental innovations and efficient use of resources, has a positive relationship with corporate carbon performance, in terms of reduced greenhouse gas (GHG) emission intensity. Second, we find that the relationship between corporate sustainability initiatives and corporate carbon performance is stronger for firms in polluting industries. Overall, our evidence lends support for the efficiency‐oriented arguments of the neo‐institutional theory in that organisations respond to climate‐related risks by making substantive engagements in corporate sustainability initiatives, such as emission reduction initiatives, environmental innovations and efficient use of resources, which in turn facilitates organisations' effort to reduce GHG emission and improve corporate carbon performance.

Suggested Citation

  • Faizul Haque & Collins G. Ntim, 2022. "Do corporate sustainability initiatives improve corporate carbon performance? Evidence from European firms," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3318-3334, November.
    • Handle: RePEc:bla:bstrat:v:31:y:2022:i:7:p:3318-3334
    DOI: 10.1002/bse.3078
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    2. Fengxue Yin & Yanling Xiao & Rui Cao & Jianhua Zhang, 2023. "Impacts of ESG Disclosure on Corporate Carbon Performance: Empirical Evidence from Listed Companies in Heavy Pollution Industries," Sustainability, MDPI, vol. 15(21), pages 1-19, October.
    3. Ali Meftah Gerged & Rami Salem & Eshani Beddewela, 2023. "How does transparency into global sustainability initiatives influence firm value? Insights from Anglo‐American countries," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4519-4547, November.
    4. Zhang, Wei & Qin, Chu & Zhang, Wenyao, 2023. "Top management team characteristics, technological innovation and firm's greenwashing: Evidence from China's heavy-polluting industries," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    5. Pingguo Xu & Leyi Chen & Huajuan Dai, 2022. "Pathways to Sustainable Development: Corporate Digital Transformation and Environmental Performance in China," Sustainability, MDPI, vol. 15(1), pages 1-21, December.
    6. Lorenzo Dal Maso & Laura Gianfagna & Federico Maglione & Nicola Lattanzi, 2024. "Going green: Environmental risk management, market value and performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 122-132, January.
    7. Alatawi, Ibrahim A. & Ntim, Collins G. & Zras, Anis & Elmagrhi, Mohamed H., 2023. "CSR, financial and non-financial performance in the tourism sector: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 89(C).

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