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Assessing corporate climate action: Corporate climate policies and company-level emission reductions

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  • Lena Klaaßen
  • Christian Lohmüller
  • Bjarne Steffen

Abstract

Private investment decisions are expected to play a decisive role in redirecting capital flows in line with the Paris Agreement. The financial sector and policymakers have emphasized the role of corporate climate action and climate-related disclosure, including backward-looking emissions figures and forward-looking information on corporate climate policies to enable investors to reallocate capital to firms with promising emission reduction pathways. However, there is at best inconclusive evidence on the relationship between corporate climate policies and subsequent company-level emission reductions. Previous research was limited by small sample sizes and short observation periods, impeding the analysis of time-lagged effects or the inclusion of company-level fixed effects. To overcome these shortcomings, we draw on a new dataset with 17,198 observations from 1,749 companies that disclosed their corporate climate policies between 2010 and 2022. While our results show only a weak link between individual policies and company-level emissions, we find some evidence for an improved climate performance for absolute emissions for companies that introduced a comprehensive corporate climate policy mix. This is in line with public policy research that has found comprehensiveness to be an important dimension for public policy mixes and emphasizes the role of a mix of corporate climate policies rather than relying on individual measures.

Suggested Citation

  • Lena Klaaßen & Christian Lohmüller & Bjarne Steffen, 2024. "Assessing corporate climate action: Corporate climate policies and company-level emission reductions," PLOS Climate, Public Library of Science, vol. 3(11), pages 1-27, November.
    • Handle: RePEc:plo:pclm00:0000458
    DOI: 10.1371/journal.pclm.0000458
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