Stakeholder pressures and corporate climate change mitigation strategies

Abstract

Climate change mitigation and its related reduction of greenhouse gas (GHG) emissions is one of the most important challenges facing society. The major cause of the problem and the key to its solution are GHG‐intensive firms that emit vast amounts of anthropogenic GHG emissions. The study reported herein aims to increase our understanding of the climate change mitigation strategies of these firms, in particular their antecedents and effects. A comprehensive conceptual model is proposed and tested empirically based on a survey of 247 firms that participated in the European Union's Emissions Trading Scheme in the first two trading periods. We find that market pressures for reducing GHG emissions, perceived GHG‐related regulatory uncertainty and environmental strategy focus are important determinants of corporate GHG reduction strategies which, in turn, enhance GHG‐related performance. We also show that the results vary depending on the type of emissions.

Mitigating climate change: A role for regulations and risk‐taking

“…Second, similar to recent calls for examining the interplay between external and internal pressures (Cadez et al, ; Sprengel & Busch, ), we examine climate change choices, within firms across multiple GHG‐intensive sectors facing similar institutional pressures regarding climate change, to better understand how interactions between external institutional context and internal firm‐level choices (e.g., risk tolerance and environmental wrongdoing) encourage, or discourage, climate change action. This multilevel and multisector view (Orlitzky, Schmidt, & Rynes, ; Orlitzky, Louche, Gond, & Chapple, ; Slawinski et al, ) examines why multiple firms across sectors take action because the opposite is prevalent: “many firms have not reduced their absolute greenhouse gas (GHG) emissions” (Slawinski et al, , p. 256).…”

“…Departing from a neoclassical economics perspective of firm behavior (Friedman, ; Reinhardt, ), we embrace insights regarding how institutional contexts simultaneously constrain and enable firm behavior (Campbell, ; emphasis added) to create a vicious circle of action (inaction) (Slawinski et al, ). We posit that firms operating within sectors significantly contributing to climate change, a subset within GHG‐intensive industries (Cadez, Czerny, & Letmathe, ; Sprengel & Busch, ), are enmeshed within a set of socio‐cultural expectations, explicit and implicit climate change regulations, and heightened media scrutiny and extant eco‐activism. We argue that these firms in climate change sectors face a patchwork of formal and informal scrutiny, alongside general and specific GHG regulations imposed by multiple stakeholders (what we refer to as regulated firms within a GHG‐intensive institutional context).…”

Carbon disclosure and financial performance: UK environmental policy

“…A growing number of firms have made their global warming strategies part of their core policies because they recognise that going green can save money through improved energy efficiency and waste management, among other factors. Under current regulatory reforms intended to address the growing environmental concerns of diverse stakeholders, climate change and energy transitions have become pressing financial and social issues (Cadez, Czerny, & Letmathe, ). Green finance has recently emerged as a standard aspect of many investment decisions (Ward, ).…”

The interplay between stakeholders, resources and capabilities in climate change strategy: converting barriers into cooperation

“…Herrmann & Guenther, ; Lee, ; Sakhel, ; Weinhofer & Hoffmann, ), and examining corporate responses as a result of stakeholder pressure (e.g. Cadez, Czerny, & Letmathe, ; Pesonen & Horn, ; Pinkse & Busch, ; Sprengel & Busch, ). A few studies analyze the development of organizational capabilities and the role of stakeholders in the context of the low‐carbon economy (Baranova & Meadows, , Heikkinen, , Kolk & Pinkse, ).…”