Publication Type

Working Paper

Version

publishedVersion

Publication Date

1-2022

Abstract

This paper examines whether and how firms combat climate change. Our study provides robust evidence that firms outsource part of their carbon emissions to foreign suppliers and shows how internal and external stakeholders significantly shape firms' environmental policies. Furthermore, firms tend to seek a foreign supplier and decrease their emission abatement efforts as pressure to reduce domestic emissions intensifies. These firms are also less incentivized to develop green technologies. Finally, we find that outsourcing emissions has real and economic consequences, with investors demanding a higher carbon premium for their exposures to carbon risks associated with increased outsourced emissions.

Keywords

Outsourcing Emissions, Imports, Stakeholders, Reputational Risk, Green Technologies, Carbon Premium

Discipline

Corporate Finance | Environmental Sciences | Finance and Financial Management | Strategic Management Policy

Research Areas

Finance

First Page

1

Last Page

52

Identifier

10.2139/ssrn.3765485

Publisher

European Corporate Governance Institute Working Paper

City or Country

Brussels

Embargo Period

4-25-2022

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.2139/ssrn.3765485

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