Driving businesses towards a better climate: Macro and micro mechanisms to protect the planet

Citation

Al-Shaer H, Liu S & Khaldoon A (2023) Driving businesses towards a better climate: Macro and micro mechanisms to protect the planet. Business Strategy and the Environment. https://doi.org/10.1002/bse.3575

Abstract
This study examines whether corporate commitment to climate change is driven by country-level factors related to cultural values and the legal system (LS) of a country. We also investigate the impact of corporate governance strength on climate change commitment and the extent to which there are moderating effects between corporate governance and cultural and LS influences. We use a large dataset of 21,564 firm-year observations of companies operating in the United States, UK, and China for the period 2013 to 2020 and develop a unique measure for climate change commitment using different proxies for measuring climate change practices. We find variations in climate change commitment among the three countries and that cultural values and LSs affect corporate commitment to climate change. Companies located in a socially oriented society, which are transparent and characterized by long-term orientation, are more strongly involved in climate change actions. The strength of corporate governance increases corporate commitment to climate change. Corporate governance also moderates some of the detrimental cultural influences on climate change commitment. These findings have implications for managers as they reveal that macro-level factors affect behavior and that corporate governance can help to moderate these factors.

Keywords
climate change commitment; corporate governance; legal system; national culture

Journal
Business Strategy and the Environment

People

Professor Habiba Al-Shaer

Professor in Accounting, Accounting & Finance