Mitigating Climate Change: A Role for Regulations and Risk‐Taking

Item

Title

Mitigating Climate Change: A Role for Regulations and Risk‐Taking

List of Authors

Andrew Bryant; Jennifer J. Griffin; Vanessa G. Perry

Abstract

Why do some firms engage in actions to reduce climate change? We propose two counterintuitive mechanisms: high levels of regulation and a firm's increased tolerance for risk. Drawing from insights on how institutional contexts constrain, and enable, prosocial firm behavior, we argue that external pressures, amplified internally by a firm's higher tolerance for risk, increase the likelihood that a greenhouse gas (GHG)‐intensive firm will engage in climate change actions that exceed regulatory requirements. An analysis based on 7,101 observations of U.S. publicly traded firms during the 2013 to 2015 period supports our hypotheses. Our models show high overall prediction accuracy (88.6%) using an out‐of‐time holdout sample from 2016. Moreover, we find that firms that have exhibited environmental wrongdoing are also more likely to engage in beyond‐compliance activities, which may be a form of greenwashing. Thus, more formal and informal regulatory oversight has the potential to spur positive environmental actions. This has implications for a firm's corporate social responsibility actions as well as for climate change regulatory policy.

Date

2019

Publication Title

Business Strategy and the Environment

Publisher

Wiley

Identifier

DOI 10.1002/bse.2391

Bibliographic Citation

Bryant, A, Griffin, JJ, Perry, VG. Mitigating climate change: A role for regulations and risk‐taking. Business Strategy and the Environment. 2020; 29: 605– 618.

Item sets

Site pages

https://onlinelibrary.wiley.com/cms/asset/efb8cf9f-bc94-4be3-9a11-e3476f3ae2b2/bse.v29.2.cover.jpg