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Climate governance, CSR strategy, and corporate environmental decoupling

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  • Mushtaq, Rizwan
  • Du, Anna Min
  • Bahoo, Salman

Abstract

This study, utilizing a global dataset of 32,382 firm-year observations from 2004 to 2023, reveals a positive and statistically significant relationship between climate governance and corporate environmental decoupling. We find that climate governance decreases under-reporting (corporations disclose fewer details about their sustainability practices than they perform) and increases over-reporting (corporations report sustainability practices more extensively than they perform). However, the mere presence of climate governance is insufficient. The study contributes to the literature by confirming that when combined with a strong CSR strategy and third-party assurance (e.g., Big 4 audits, external CSR audits), climate governance becomes more effective in mitigating overall corporate environmental decoupling. The study offers important implications for corporate boards and policymakers seeking to align sustainability disclosures with actual performance.

Suggested Citation

  • Mushtaq, Rizwan & Du, Anna Min & Bahoo, Salman, 2025. "Climate governance, CSR strategy, and corporate environmental decoupling," Finance Research Letters, Elsevier, vol. 85(PA).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pa:s1544612325011833
    DOI: 10.1016/j.frl.2025.107925
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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