Stakeholders and voluntary climate reduction goals at large U.S. firms: An institutional analysis

Abstract

What leads firms to develop voluntary greenhouse gas reduction goals? This paper discusses the results of interviews conducted with vice presidents and managers responsible for environmental sustainability initiatives at large U.S. firms. To situate the analysis, it develops a theoretical framework that sees the firm as a socially embedded creation, where stakeholder groups exert varying levels of influence and provide the context in which the firm responds to outside information in the face of uncertainty. By understanding the firm as socially embedded, the influence and power of groups that have strong preferences for or against environmental protection can be understood. The interviews provide empirical support for this model. Subjects discuss the role of stakeholder groups such as activists, shareholders, consumers, and workers in the development of the firm’s environmental policy. Groups can prompt the firm to set greenhouse gas or energy use reduction goals, and they encourage the firm to reexamine production processes to find new ways to both reduce costs and emissions. This suggests that policies to regulate industrial greenhouse gas emissions may be less costly than some projections indicate.