Effectiveness of Emission Reduction Policies and the Role of Corporate Governance

Abstract

This study investigates the relationship between emission reduction policies (ERPs), corporate governance (CG), and greenhouse gas (GHG) emissions across firms from developed and emerging economies between 2011 and 2022. Using a comprehensive firm-level dataset and a multi-method approach, including pooled OLS and longitudinal firm fixed effects models, the study provides robust evidence on how CG enhances the effectiveness of ERPs. The results indicate that while ERPs alone have limited impact on reducing GHG intensity, firms with strong corporate governance structures achieve more substantial emission reductions, particularly in high-emission sectors and well-governed environments. Thus, corporate governance plays a moderating role in ensuring that ERPs translate into substantive environmental outcomes rather than symbolic actions. These findings highlight the importance of governance in addressing cheap-talk and inform policymakers and investors on the critical need for high-quality ESG data to guide decision-making and promote genuine corporate sustainability efforts.

Presenters

Michael König Sykorova
Climate Finance Expert (and PhD Candidate), FS-UNEP Centre for Climate and Renewable Energy Finance, Frankfurt School of Finance and Management, Hessen, Germany

Details

Presentation Type

Paper Presentation in a Themed Session

Theme

Technical, Political, and Social Responses

KEYWORDS

CLIMATE CHANGE, GHG INTENSITY, ESG, BUSINESS STRATEGY, GOOD GOVERNANCE