An empirical examination of how the corporate governance and strategy affect GHG emissions efficiency
This study aims to empirically examine how environmental efficiency related to GHG emissions is affected by corporate governance and activities. This study uses data from CDP (former Carbon Disclosure Project) where the observations are 686 firms worldwide in 2013. As proxy for the environmental efficiency, this study adopts GHG emissions per employee. As independent variables, this study uses dummy variables made from CDP questionnaire. Regarding the corporate governance, this study finds that the amount of greenhouse gas emissions per employee is low (i.e., efficient) when direct responsibility for climate change is taken by individual/sub-set of the board and other and senior manager/officer. However, when companies engage directly or through trade associations on climate change, the companies are considered to be less efficient than other companies. On the other hand, regarding corporate activities, this study finds that environmentally inefficient companies (i.e., more greenhouse gas emissions per employee) are likely to participate in emissions trading schemes, take a verification/assurance status that applies to firm’s Scope 3 emissions at the first year, and engage with customers.