Economic Policy Uncertainty and Climate Change: Evidence from CO2 Emission

Owing to the urgency of the climate change crisis and the emerging greenwashing issue that companies face, greenwashing in companies' carbon reduction is exceptionally important in the progress of global carbon reduction and the achievement of the Paris Agreement goals. Therefore, this study focused on multinational corporations (MNCs) listed on the 2021 Fortune Global 500 list (2001–2020) and used institutional theory to theoretically discuss and empirically test the relationship between MNCs' environmental scores and carbon emissions/intensity, as well as the moderating effect of national culture. Our results demonstrate that the environmental scores of MNCs positively affect their carbon emissions and intensity, meaning that managers tend to use high scores to hide their poor carbon reduction, showing a typical “talk” more and “act” less (i.e., greenwashing) behavior. Meanwhile, the moderating effects of individualism, masculinity, and uncertainty avoidance were negative. These revealed that the balance of MNCs' “talk” and “act” can be influenced by the domestic national cultural characteristics. Further analysis showed that the Paris Agreement did not prevent MNCs' greenwashing in carbon reduction. Such greenwashing behavior has become even worse in societies with power distance characteristics after the Paris Agreement. To the best of our knowledge, this is the first study to investigate companies' greenwashing in terms of carbon reduction. The goal is to enhance our understanding of why and how greenwashing occurs based on the institutional theory perspective, extend the application of institutional theory, enrich the literature on companies' greenwashing and national culture, and offer insight into interdisciplinary research between national culture and green transition management. Finally, suggestions for policymakers on how to prevent MNCs' greenwashing in carbon reduction, considering national cultural influence, were provided.

Section: Sample and Datamentioning

confidence: 99%

“…However, the rating results are reliable with comparability whether before or after 2018. Therefore, the latest study has selected the Refinitiv Eikon Asset4 as a data source (Benlemlih & Yavas ¸, 2023).…”

Section: Variable Developmentmentioning

confidence: 99%

Do environmental scores become multinational corporations' strategic “greenwashing” tool for window‐dressing carbon reduction? A cross‐cultural analysis

Peng,

Li,

Tang

et al. 2023

“…For example, Long et al (2023) find that green innovation is promoted more profoundly by national environmental, social and governance performance in high-income countries than non-high-income countries. Orazalin et al (2023) show that the negative impact of greenhouse gas emissions on firm market value is more observable for the European Union Emissions Trading System (EUETS) countries than are those in non-EUETS countries, and Benlemlih and Yavas ¸(2023) proved that economic policy uncertainty drives carbon emissions more strongly in low-public governance countries. Considering these prior reports and our study's findings, we suggest that foreign directors may help firms fill the void arising from the weakness of the institutional environment and align them with cleaner operational processes.…”

Section: High and Low Wgimentioning

confidence: 99%

Do foreign directors reinforce better waste management? The moderating role of eco‐innovation

Uyar,

Al‐Shaer,

Kuzey

et al. 2023

Prior studies have reported an association between corporate waste management practices and certain board attributes, but none have focused on foreign directors. Therefore, we examine foreign directors' contributions to firms' waste management by exclusively focusing on waste reduction and recycling. Furthermore, we explore an important channel through which foreign directors spur better waste management, namely, eco‐innovation. Drawing on 6891 observations affiliated with 9 sectors and 46 countries, we execute country, industry and year fixed‐effects regression analysis. We find that while foreign directors on the board are negatively associated with waste generation, they are positively associated with waste recycling. Furthermore, while the eco‐innovativeness of firms negatively moderates the association between foreign directors on the board and waste generation, it positively moderates the association between foreign directors on the board and waste recycling. Further channel analyses reveal more insights concerning polluting versus non‐polluting and poor versus strong regulatory environments.

Climate policy uncertainty and firm‐level carbon dioxide emissions: Assessing the impact in the U.S. market

Borozan,

Pirgaip

2024

This paper examines the impact of climate policy uncertainty (CPU) on carbon dioxide (CO2) emissions of 1007 listed firms over 2003–2021. As the urgency to combat climate change and implement effective policies may create uncertainty, it focuses on the Unites States, a significant emitter with a complex policy landscape. Using the two‐step system generalized method of moments estimation, the analysis reveals a negative CPU–CO2 emissions relationship, indicating that increased CPU incentivizes firms to adopt sustainable practices, leading to emissions reductions. Capital expenditures have similar effects on emissions, accompanied by increased corporate sustainability engagement. However, no significant relationship is found between research and development (R&D) expenditure and CO2 emissions, nor does CPU significantly moderate the R&D–CO2 emissions nexus. Firms with substantial fixed assets exhibit higher CO2 emissions, while heavy emitters demonstrate limited CPU responsiveness. These findings provide valuable insights for policymakers encouraging corporate participation in emissions reduction efforts.