Corporate governance and carbon emissions performance: empirical evidence from Australia

Abstract

ABSTRACT There is a growing volume of literature on corporate governance and sustainability. Despite this, the relationship between corporate governance (CG) and carbon emissions performance (CEP) is an unresolved issue. This motivates us to examine the impact of CG on CEP, using a sample of all Australian firms that have participated in the Carbon Disclosure Project (CDP) questionnaire survey. This study employs fixed-effects modelling for an unbalanced panel of 425 firm-year observations from 2010–2018. We find that firms with higher board independence and the presence of an environmental committee show enhanced CEP. Further, frequency of board meetings and gender diversity lead to improved CEP. However, ownership concentration does not appear to improve CEP. Our article provides valuable insight for corporate directors and regulators to help them recognize the vital role that board meetings, board gender diversity, board independence, and the presence of an environmental committee play in driving the carbon performance of companies. They can also use these results to identify positive elements of CG that may deserve additional regulatory focus to achieve carbon policy objectives. This study contributes to the increasing literature on the association between CG and climate change and presents a new direction for related research on whether and how CEP is influenced by CG.