Democracy, national culture and greenhouse gas emissions: An international study

Abstract

This study examines whether a country's level of democracy is associated with greenhouse gas emission intensity of corporations and if national culture influences this association. Using cross‐country evidence, we find that firms operating in countries with strong democratic institutions are negatively associated with carbon emission intensity controlling for other country‐level variables. Democracy also moderates the positive effect of individualistic cultures on greenhouse gas emission intensity, whereas countries with high uncertainty avoidance and indulgence are associated with high emissions despite high democratic scores. That is, while the effects of democracy and culture on greenhouse gas emission intensity supplement each other, culture shapes a firm's strategy on environmental matters to a greater extent than democracy. The results are robust to alternative variable measurement.

National culture and firm-level carbon emissions: a global perspective

“…To identify the underlying causes of emissions, it is potentially useful to assess the direct association between culture and emission. Thus, we extend Muttakin et al (2022) by demonstrating how cultural dimensions directly affect firm-level emissions globally. In addition, the authors use only individualism and uncertainty avoidance as a moderator for the association between democracy and emissions.…”

“…However, our study is distinct from Muttakin et al (2022) in diverse aspects. This research concentrates on the direct effect of cultural constructs on emissions, which is not explored by Muttakin et al (2022). As discussed earlier, a society's environmental orientation is fundamentally driven by the cultural factors that create its perspectives on the environment.…”

“…Mooneeapen et al (2022) find that corporate environmental, social and governance (ESG) performance is higher in countries with a lower level of democracy and political stability. In contrast, Muttakin et al (2022) demonstrate that the emissions level is lower in countries with a higher level of democracy. The authors also suggest that cultural constructs such as individualism and uncertainty avoidance moderate the association between democracy and emissions.…”

Does environmental sustainability attract foreign investment? Evidence from developing countries

“…If lax environmental regulations and environmental degradation serve as bait in attracting FDI, then this calls for serious attention of policymakers and international community. In recent decades, environmental degradation (mainly the emissions of greenhouse gases) has contributed enormously to climate change (Muttakin et al, 2022).…”

“…If lax environmental regulations and environmental degradation serve as bait in attracting FDI, then this calls for serious attention of policymakers and international community. In recent decades, environmental degradation (mainly the emissions of greenhouse gases) has contributed enormously to climate change (Muttakin et al, 2022). Over the past couple of years, the effects of climate change have been intense; increasing bushfires have been seen in several countries (Australia, Turkey, United States), massive flooding in parts of Asia, the United States and Europe, and severe droughts in many countries in Africa among others.…”