Corporate Environmentalism: Motivations and Mechanisms

Abstract

Corporate environmentalism (CE) pertains to firm-level efforts to reduce pollution and resource use along with protecting natural habitats. Importantly, firms pledge to undertake these actions beyond the requirements of the law. Although historically CE efforts focused on resource conservation, their contemporary focus is on pollution reduction to reduce direct harm to humans and their communities and on the protection of environmental sinks. We review two broad categories of CE: direct CE and indirect CE. Direct CE, whether undertaken unilaterally or collectively, pertains to firms themselves adopting policies that reduce the environmental impact of their activities, or disclosing information about their environmental performance. Indirect CE refers to policies of actors (such as financial institutions) that encourage firms seeking their resources (through loans, venture capital, etc.) to commit to environmental stewardship policies. Three key lessons emerge. First, firm-level characteristics, particularly size and economic performance, encourage CE. Second, although pressure from external stakeholders, especially environmental nongovernmental organizations (NGOs), has played an important role in discouraging policies that harm the environment, its effect on encouraging proenvironmental activities remains unclear. Third, the literature is ripe with serious methodological issues. The endogeneity between firms' economic and environmental record and their CE efforts poses difficulty in drawing causal inferences.

Determinants and Characteristics of Korean Companies’ Carbon Management under the Carbon Pricing Scheme

“…'Internal needs for cost management' achieved a relatively high score (averaged at 3.56). Seeking resources through loans, venture capital, etc., to commit to environmental stewardship policies, investors were thought to be important to spur changes in organizational practices [56]. However, the sampled companies in this study viewed financial institutions as having a low level of influence in their carbon management.…”

How Do Companies Respond to Environmental, Social and Governance (ESG) ratings? Evidence from Italy

“…Foremost amongst these are investors who, it is suggested, increasingly use ESG data to govern the ethical and sustainability behaviour of firms in which they invest (Amel-Zadeh and Serafeim 2018;van Duuren et al 2016). Analysing firms' responses provides an opportunity to better understand whether and, if so, how, external evaluations shape corporate decision-making and action in the area of E, S and G (Chrun et al 2016). This is important for scrutinising claims about the substantive contribution of informationbased governance to CSR, and whether such approaches give rise to substantive or symbolic change (Depoers et al 2016;Kim and Lyon 2011).…”

Firm participation in voluntary regulatory initiatives: The Accord, Alliance, and US garment importers from Bangladesh

“…Similarly, when consumers demand attention to environmental concerns, or when other firms in the industry adopt environmental initiatives, firms are more likely to commit to voluntary environmental programs (Delmas and Toffel 2008). NGO campaigns may serve to heighten pressure from consumers and supply chain partners (Chrun et al 2016, Innes and Sam 2008, Nikolaeva and Bicho 2011. Firms also may commit to voluntary regulatory initiatives as a means of avoiding attention or inspections from public regulators (Toffel and Short 2011; also see Videras and Alberini 2000).…”