Socially Responsible Businesses and Innovation Activity in Mexico: Do New Models Reduce CO2 Emissions?

Abstract

This research investigates whether regions with a greater presence of socially responsible businesses (SRBs) and higher levels of innovation activity produce less CO2. SRBs create added social value and protect and care for the environment. This study adopts the empirical strategy of first identifying the companies among the 500 largest Mexican firms with an SRB distinction. Next, the SRBs are classified by state and source of capital (foreign or domestic). The sample represents 21 of the 32 Mexican states during the period 2010–2020. To reduce heterogeneity in the database and make the estimates more precise, regression models are based on the principal components method. The results confirm the effectiveness of SRBs at reducing CO2 emissions, with profitability and innovation estimated to have a greater impact than solvency and business growth. Source of capital did not change these findings, although the source of reductions differed. For domestic firms, most reductions derive from return on equity; for foreign firms, the reductions are most associated with innovation. In Mexico, the search for profitability can be achieved with social responsibility and environmental care, but this requires involving more organizations that prioritize the use of innovative techniques.