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Evaluating Emission Reduction Policies and the Influence of Corporate Governance

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  • Aws AlHares

    (Department of Accounting and Finance, Prince Mohammad bin Fahd University, 617, Al Jawharah, Khobar 34754, Saudi Arabia)

Abstract

This study examines the relationship between corporate emission reduction policies (ERPs) and greenhouse gas (GHG) emissions, with a particular focus on the moderating role of corporate governance (CG). Drawing on a dataset of 18,545 firm-year observations from 28 developed and emerging countries spanning 2013 to 2024, the analysis finds that firms with stronger corporate governance and higher ERP adoption exhibit significantly better emission intensity. These results remain robust across multiple specifications, including alternative GHG performance metrics, corporate governance proxies, and emission-intensity measures. Beyond the cross-sectional analysis, firm-level trend regressions show that improvements in a firm’s ERPs relative to the sector average are associated with reductions in emission intensity over time. The findings highlight the critical role of robust corporate governance in mitigating greenwashing risks and ensuring the credibility of corporate climate commitments. By emphasizing the interplay between corporate governance and ERPs, the study contributes to the literature on climate governance and corporate environmental strategy. It also offers practical implications for investors and regulators, underlining the need to assess not only ERP commitments but also the governance structures that determine their effectiveness.

Suggested Citation

  • Aws AlHares, 2025. "Evaluating Emission Reduction Policies and the Influence of Corporate Governance," Sustainability, MDPI, vol. 17(18), pages 1-31, September.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:18:p:8204-:d:1747560
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    References listed on IDEAS

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