Corporate Carbon Management Research Articles

Carbon emission trading scheme and carbon performance: The role of carbon management system

This study investigates the effects of carbon emission trading schemes (ETSs) on corporate carbon performance, a critical area given the increasing global concern over climate change and the urgent need for effective emissions reduction mechanisms. Using a sample of listed companies in China and employing a difference-in-differences (DID) design, we find that firms participating in a pilot ETS show an improvement in carbon performance. This improvement is primarily attributed to greater low-carbon innovation outputs in the post-ETS period. Further analyses reveal the crucial role that ETSs play in enabling corporate carbon management systems to effectively enhance carbon performance. We also find that resource availability significantly influences the impact of ETSs, and participating firms generally experience economic benefits 3 years post-implementation. Finally, our results suggest that the positive effects of an ETS on carbon performance are replicable in national ETS contexts.

Uncovering the intensity of climate risk and opportunity: Awareness and effectiveness

This paper examines the effect of awareness regarding climate change risks and opportunities on the proactive carbon management systems of U.S. S&P 500 companies. We develop our hypotheses based on institutional theory, stakeholder theory, and prospect theory. Our findings indicate a significant positive association between our self-constructed measurement of company risk and opportunity awareness and carbon management practices. We observe that financially constrained firms exhibit a lesser response to both climate change risk and opportunity awareness. Additionally, we note that firms with low profitability are more responsive to climate change risks, whereas we found no evidence linking climate change opportunity awareness to carbon management systems, consistent with prospect theory. Finally, we investigate the impact of carbon management systems on carbon reduction performance to examine the effectiveness of such awareness. In summary, this study provides the first evidence of how awareness of climate risk and opportunity influences corporate carbon management practices in a U.S. setting. Our findings imply that awareness serves as the initial step in prompting positive actions to manage risks and capitalize on opportunities. These results offer novel insights and information relevant to the recent policy initiative aimed at transitioning climate risk disclosure from voluntary to mandatory.

Development Status and Management Experience of Corporate Carbon Management in the Dual Carbon Background: A Case Study of Huayin Power

In order to address global environmental issues such as climate change, countries around the world have introduced climate change policies, such as the Kyoto Protocol and the Paris Agreement, to limit global carbon emissions. China has actively responded to climate change and other political and economic issues and proposed the "Dual Carbon" strategy in 2020, vigorously developing clean energy and promoting the green and low-carbon transformation of industries. This paper analyzes the impact of "carbon trading" on the "carbon management" of Hua Yin Electric Power from the perspective of ESG analysis, focusing on the environmental, social, and corporate governance aspects. The study aims to summarize the management experience of Hua Yin Electric Power in "carbon management" and provide reference for further optimizing and improving the "carbon management" in the power industry. Hua Yin Electric Power, as a leading company in the power industry, is representative and has reference significance for the optimization and improvement of "carbon management" in the power industry.

Decarbonization in the Automotive Sector: A Holistic Status Quo Analysis of Original Equipment Manufacturer Strategies and Carbon Management Activities

The automotive sector is a significant contributor to global carbon emissions and, as such, to climate change. However, there is currently no publicly available sector-wide insight into the extent to which Original Equipment Manufacturers (OEMs) in the automotive sector have implemented decarbonization strategies and carbon management activities. This paper addresses this issue by collecting and analyzing the implementation status of all OEMs with annual sales of more than 500,000 light-duty vehicles. For this purpose, a structured set of criteria is developed that allows conclusions to be drawn for several areas of corporate carbon management. The analysis shows a sector-wide implementation of decarbonization strategies and carbon management activities. However, significant regional differences in external communication, data transparency and methodological inconsistencies emerge. This study provides both academics and practitioners in the automotive industry with valuable insights into current reporting practices, target setting and communicated mitigation actions. On this basis, scientists can project possible greenhouse gas (GHG) emission pathways, align their research with the focus of practitioners to provide them with science-based data, and work on the methodological inconsistencies. Furthermore, the developed criteria provide a useful toolbox for the holistic analysis of other industries.

Corporate carbon management system

The basis of the company’s decarbonization is the effective management of greenhouse gas emissions. The article visualizes in graphic material the forecast values of the mass of greenhouse gas emissions in the fuel and energy sector of Russia until 2030 and determines the trends in their changes. Based on the results of the analysis, it was revealed that in order to achieve a low-carbon development path, it is necessary to introduce additional measures to reduce greenhouse gas emissions. The purpose of the scientific research is to develop a corporate carbon management system, which can become a guideline for the development of corporate systems by Russian oil and gas companies. A reliable system for recording and monitoring greenhouse gas emissions serves as the basis for obtaining up-to-date, complete and reliable data. At the same time, for the quality control of the decarbonization process, a scheme of interaction within the company should be clearly built. The development and implementation of a carbon management system will allow the company to systematically reduce greenhouse gas emissions, which will create conditions for the transformation of climate risks associated with government regulation into the category of opportunities such as entering carbon markets, attracting investors, etc. The authors note that in most large Russian companies have already developed and introduced carbon management systems into production. After analyzing the current greenhouse gas accounting system of JSC “Zarubezhneft’’, the authors propose to create a carbon management system taking into account the specifics of the company, which consists in organizing activities on the territory of different countries (Cuba, Bosnia and Herzegovina, Egypt, Uzbekistan, Indonesia, Vietnam and Russia). It is proposed to adapt the methodological approaches for calculating greenhouse gas emissions to the requirements of the legislation in force in the territory where the production facilities of the JSC “Zarubezhneft’’ are located, and also to apply national coefficients in the calculation to ensure more accurate emission estimates. The result of the study is the development of the concept of the carbon management system of JSC “Zarubezhneft’’.

The role of CEO regulatory focus in increasing or reducing corporate carbon emissions

AbstractThis article contributes to the emerging stream of corporate carbon emission research, which zooms in on CEOs' responsibility in organizations' strategic decision‐making. This investigation offers new knowledge of how a CEO's regulatory focus can shape whether firms reduce their carbon footprints. Building on regulatory focus theory, this study proposes how the two distinct motivational dispositions (i.e., promotion or prevention focus) of a CEO relate to corporate carbon emissions. We empirically analyzed S&P 500 firms from 2007 to 2018. The findings indicate that CEOs with a high promotion focus are positively associated with corporate carbon emissions, whereas CEOs with a high prevention focus are negatively linked to corporate carbon emissions, with the latter relationship weakened by industry volatility. The findings reported in this study enrich carbon emission research by devoting attention to cognitive and motivational aspects of CEOs for corporate carbon management.

Revisiting the Impact of Corporate Carbon Management Strategies on Corporate Financial Performance: A Systematic Literature Review

The objective of this research is to examine the relationship between carbon management strategies in corporations and their impact on financial performance. We employ a systematic literature review to analyze 223 articles retrieved from reputable journals indexed in Scopus. A total of 22 empirical studies covering various industry sectors and countries were selected and included in our analysis. The result indicates that 59% of the articles demonstrate positive findings. Among these, 50% show a significant positive impact, while 9% exhibit mixed results with both positive and negative outcomes in the short and long-term perspectives. These findings suggest that adopting carbon management strategies predominantly has a positive influence on corporate financial performance. In this study, we also provide a summary of the dependent, independent, and control variables, as well as commonly used indicators in this research topic, to help guide future quantitative research. Lastly, we offer a summary of the motivations, drivers, and barriers that corporations experience when implementing carbon management strategies. These insights will be valuable for business managers and policymakers, aiding them in successfully embarking on the journey to achieve net-zero emissions.

Integration of coupled sectors decarbonization pathways across the value chain into corporate carbon management processes

To contribute to the mitigation of climate change, a significant number of businesses from a wide range of sectors increasingly commit to science-based carbon reduction targets. However, to integrate their ambition into strategic and operational business processes, companies often merely rely on historically determined emission data. These data provide limited support in forecasting the company's future product emissions within the framework of corporate carbon controlling. This implies for example that windfall gains from regulatory and individual decarbonization efforts in coupled sectors can only be forecasted to a limited extent. Yet, for a more reliable basis for decision making, not only proactive product planning but also scenario pathways on how coupled business sectors will progress must be incorporated. Especially for companies with complex, globalized supply chains highly dependent on raw materials, this leads to a more dependable analysis of the carbon hot-spots to be tackled. Therefore, based on an analysis of current corporate carbon management practices, a framework is elaborated to expand corporate carbon controlling to coupled sectors and their decarbonization pathways. This includes a method to integrate decarbonization forecasts of coupled sectors within a company's product planning activities. This method is illustrated with an exemplary case study, in which the product related emissions of a fictive automotive manufacturer are forecasted between 2020 and 2050 using product portfolio projections and coupled sector decarbonization. The latter leads to an overall company's carbon emissions reduction in 2050 by about 77% in comparison to the prediction neglecting external sustainability aspirations and thus emphasizes the importance of capturing these effects.

Regional determinants of low carbon transition in Russian companies: the impact of human capital and digitalization on corporate carbon management practices

Objective. The purpose of this article is to identify the regional determinants of the low carbon transition in Russian companies. These determinants are related to human capital and digital technologies development in local economic ecosystems. Methods. The study relies on linear regression methods and examines the impact of education, wages, the use of the broadband Internet, cloud technologies and ERP (Enterprise Resource Planning) systems in Russian regions on companies’ motivation to manage their carbon dioxide emissions. Results. The results show that human capital has an ambiguous effect on the behavior of companies that support the low carbon transition. On the contrary, the digitalization of regions is significantly and positively associated with the implementation of environmental and energy management practices in Russian companies, especially among service companies. Conclusion. Low carbon transition is becoming an essential component of the national development strategy, as climate resilience issues directly affect the economic performance of production systems. The study considers two types of factors that influence the implementation of management practices for the low-carbon transition: these are human capital and the digitalization of regions.

Carbon Accounting Measurement with Digital Non-Financial Corporate Reporting and a Comparison to European Automotive Companies Statements

The regulatory environment for both sustainability and financial reporting is changing as standardisation and digital reporting (e.g., XBRL) are gaining traction within regulators. The measurement methodology and mandatory information content of disclosures are yet to be decided for corporate CO2 reporting by EU regulators and standard-setting organisations. In our study, we reviewed the sustainability reports of three leading German automotive groups by revenue for the period 2016–2020 as a case study. The research methodology was carried out with text-mining-aided content analysis to provide a collection of sustainability standards (GRI and SASB) in the evaluation of emissions reporting. As an addition to prior literature, conditions of relevance and clarity regarding published information were introduced in the evaluation process of compliance to CO2 disclosures. Companies by reporting practice were assigned to different stages of carbon management and actual emissions were evaluated. In the conclusions, discussion of the reliability of reported sustainability information, the applicability of digital reporting is provided through regional perspectives. We found that although analytical methods are available to assess the level of corporate carbon management, their usefulness is limited if the data are not reliable. Significant progress can be expected from analyses using standardised, comparable corporate carbon data.

Investors' carbon risk exposure and their potential for shareholder engagement

AbstractThis article examines the exposure to and management of carbon risks of different investor types. Considering the dual role as portfolio manager and partial owner, we analyze carbon risk for investors both in terms of exposure to portfolio values and in terms of responsibility as shareholder of carbon‐intensive firms. We show that among various investor types, the preference for holding carbon‐intensive stocks differs substantially, even when considering traditional investment decision parameters. In particular, it is governments whose portfolio values are most threatened by a carbon risk exposure of 49%, but at the same time, they prefer larger ownership shares in polluting firms. In contrast, individual investors, investment advisors, and mutual funds avoid holding stakes in these firms, while revealing only a moderate exposure of their assets to carbon risk. In view of the Paris Agreement, which includes the consistent steering of financial flows towards a low carbon transformation of the economy, our study provides policymakers with important implications regarding the coverage and effects of respective regulations. By identifying the ownership structures of carbon‐intensive firms and respective owners' portfolio compositions, we also offer implications for further research on portfolio decarbonization and shareholders' influence of corporate carbon management.

Toward a Distributed Carbon Ledger for Carbon Emissions Trading and Accounting for Corporate Carbon Management

ABSTRACT Greenhouse gas (GHG) emissions control requires coordinated efforts and collaboration at all levels of governmental bodies, non-for-profit organizations, and private sectors. However, the target is difficult to achieve due to challenges arising from conflicts of interest and lack of trust between stakeholders. Thus, we propose a distributed carbon ledger (DCL) system using blockchain technology. Our analysis suggests that the adoption of DCL not only strengthens the corporate accounting system for carbon asset management but also fits within existing market-based emissions trading schemes (ETSs). Blockchain-enabled DCL allows the integration of national emission trading schemes (ETSs) and corporate carbon asset management into a synthetic single mechanism. JEL Classifications: M41; O44.

An Analysis of the Effects of Climate Change Policy, Stakeholder Pressure, and Corporate Carbon Management on Carbon Efficiency on the Korean Petrochemical Industry

Climate change is a challenging issue for government and society as well as in business circles; it has the potential to transform the competitive business environment entirely. This study analyzed the carbon efficiency of petrochemical companies subject to the Target Management System, a Korean carbon policy. The results of data envelopment analysis of 20 Korean petrochemical companies over three years yield some interesting findings. First, companies showed a wide range of carbon efficiency ranging from 0.05 (the least efficient) to 1.00 (the most efficient). Second, because this gap is so wide, the effect of the TMS carbon policy was not apparent. Third, pressure from media and financial investors facilitates carbon efficiency. Fourth, firms’ efforts toward low-carbon product/technology development also improve carbon efficiency. This study provides some implications for managers and policy-makers who wish to foster firms’ competitiveness and reduce greenhouse gas emissions at the same time.

The Policy Role of Corporate Carbon Management: Co‐regulating Ecological Effectiveness

AbstractThe United Nations Intergovernmental Panel on Climate Change (IPCC) has called for private sector participation in global carbon governance and corporations now seem to be heeding the call at an unprecedented scale. Both critics and proponents of corporate social responsibility (CSR) interpret this as a necessary but uncertain development. Business response has demonstrably failed in the past. Contributing to the CSR and private environmental governance effectiveness literature, this article argues that while voluntary corporate climate governance efforts are essential and improving, they are far from sufficient for meaningful decarbonization. Through an evaluation of the three main underlying corporate carbon management practices (target setting, carbon pricing and carbon reporting), the article highlights how company efforts create business advantage (e.g. risk management) but fall short on ecological effectiveness (i.e. absolute carbon reduction). In response, the paper argues the importance of greater climate policy co‐regulation. This includes indirect enabling by governments and the IPCC to encourage incremental improvements in company efforts. It also includes more direct, state‐led prescriptive interventions coordinated across supply chains and supported by international organizations, to ensure corporate participation and deeper transformative change to business models, industry structures and consumptive patterns at the root of the global climate crisis.

The Role of Carbon Accountant in Corporate Carbon Management Systems: A Holistic Approach

Carbon accounting consists of a combination of advanced cost allocation techniques such as activity-based management and life-cycle costing; that improve the identification and assignments of carbon-related expenses and overheads to such objects as products, services, customers and organizational processes. The study therefore sets out to find the role of carbon accountant in corporate management systems. Data used for this investigation were collected from primary and secondary sources. Primary data are first-hand information from respondents while Secondary data include textbook, Annual Reports and financial statements and internet facilities. The study employed descriptive survey and ex-post facto research design and the formulated hypotheses were tested by use of T-Test and OLS Regression. Based on the analysis and the hypothesis tested, it showed that there is a statistically significant relationship between carbon accounting and corporate performance of selected quoted Manufacturing Companies and based on this findings, it was recommended amongst others that, adaptation to conditions that include long-term changing dynamics of the natural environment should be encouraged and the focus of finance and accounting system should not only cover short-term outcomes and management of short-term costing, reporting and disclosure but also long-term climate risks.

Environmental management accounting and its effects on carbon management and disclosure quality

Along with the development of environmental management accounting (EMA) in the past decade, a variety of management accounting and control tools have been designed and implemented to improve the measurement and management of corporate environmental performance and information. While the importance of EMA to corporate sustainability has been increasingly acknowledged, extant literature has drawn little attention on assessing and understanding EMA application and its effectiveness on the quality of carbon emission management and disclosure. Using data gathered of 114 large firms in the US, Germany, Australia and Japan, we find that many firms have applied some EMA tools, yet only a few have applied the full range of EMA tools. The empirical analysis reveals that EMA application has a significantly positive impact on both corporate carbon management and disclosure quality. Further analysis specifies that audit and benchmarking tools as well as control tools have significant effects on carbon management and disclosure, while for measurement tools no significant effects could be observed. Based on the results, implications are developed for management education and practitioners, which can help managers to make better informed choices for the application of EMA tools.

Framework for and the Role of Carbon Accounting in Corporate Carbon Management Systems: A Holistic Approach

Climate change is a complex phenomenon, however, the accounting methodology used for climate change remains poorly understood. This paper proposes a broad concept of carbon accounting: carbon accounting is a system that uses accounting methods to record and analyse climate-change information as well as account for and report carbon-related assets, liabilities, expenses, and income for decision-making purposes. In addition, this paper adopts a holistic approach to describing inter-related functions of the components of carbon accounting, showing what role it can play in the construction of corporate carbon management systems. The paper discusses how innovative and creative approaches are used to develop carbon accounting frameworks, methodologies, and programs that are workable.

Discussion of “Determinants of the Quality of Corporate Carbon Management Systems: An International Study”

Luo and Tang (in press) argue that very limited research has been done to investigate the determinants of the quality of company’s carbon management system (CMS). Hence, they try to investigate the quality of a company’s CMS and its determinants. Their results show that the quality of the CMS improved. Howev\\er, based on my analyses, the contribution of their study is limited. In addition, due to correlated omitted variables and other econometric problems, their results are suspect and unreliable.

Are Corporate Carbon Management Practices Reducing Corporate Carbon Emissions?

ABSTRACTThis paper is the first large scale, quantitative study of the impact of corporate carbon management practices on corporate greenhouse gas (GHG) emissions. Using data for 2009 and 2010 from the Carbon Disclosure Project survey, we find little compelling evidence that commonly adopted management practices are reducing emissions. This finding is unexpected and we propose three possible explanations for it. First, it may be because corporate carbon data and management practice information have not been reported in a standardized way. Second, there may be a delay between the application of corporate carbon management practices and their impact on emissions performance. Third, carbon management practices are not sufficiently impact‐oriented, meaning there is no relationship to observe. Our findings are important for policymakers designing corporate GHG reporting standards, for the multiple stakeholders trying to understand the drivers of corporate carbon performance, and for the corporate managers responsible for measuring, reporting and mitigating emissions. Copyright © 2015 The Authors. Corporate Social Responsibility and Environmental Management published by ERP Environment and John Wiley & Sons Ltd.

Carbon management accounting and reporting in practice

Purpose – The purpose of this paper is to focus on carbon accounting as one aspect of accounting for impacts on the environmental capital and to detail the “convergence” process between two emergent corporate carbon management accounting approaches within a multinational company. In contrast to the reporting stakeholder and regulatory focus, company-internal issues of carbon accounting have so far rarely been investigated in depth. Based on a qualitative analysis of this in-depth case study, questions about what could be considered an effective carbon management accounting system are raised. Design/methodology/approach – The research has been conducted with an in-depth case study, using participant observation (Spradley, 1980). The authors follow a pragmatic research approach, and the proposal of Malmi and Granlund (2009) “to create theories useful for practice is to solve practical problems with practitioners and synthesize the novel solutions to a more general form”. Findings – This case study demonstra...