Corporate Environmental Responsibility Performance Research Articles

Dual driving forces for corporate environmental responsibility performance: The synergistic effects of government environmental regulation and market multi-agent green supervision

The 26th United Nations Climate Change Conference reached a series of agreements on implementing the Paris Agreement, empowering governments to independently establish emission reduction goals and encouraging market participants to invest in sustainable development. It highlighted that enhancing corporate environmental responsibility performance (CERP), driven by the collaborative efforts of government and market forces, is key to achieving global sustainability. In this context, this study is the first attempt to investigate the synergistic effects of government environmental regulation (GER) and market multi-agent green supervision (MGS) on CERP. The findings are as follows. First, GER, encompassing the multidimensional environmental responsibilities of governments, has not effectively spurred CERP. MGS, incorporating the green concerns of diverse investors and intermediaries, serves as a significant catalyst for enhancing CERP. The synergy between GER and MGS, involving multi-stakeholder collaborative governance, plays a significant motivating role in promoting CERP. Second, financing constraints and executives' attention to corporate environmental responsibility (CER) are two key channels through which the synergy between GER and MGS influences CERP. Third, firms located in regions with better economic development, those operating in non-heavily polluting industries, or non-state-owned firms exhibit heightened proactivity in improving CERP under the synergy between GER and MGS. This paper expands research on multi-agent collaborative environmental governance from the regional macro-perspective to the micro-firm level, providing a fresh perspective and theoretical basis. The novel findings offer valuable insights for policymakers and firms, especially in economies similar to China, in containing growing environmental challenges and advancing global sustainability.

Board skill diversity and corporate environmental responsibility: the moderating effects of formal and informal pressures

Purpose This study aims to investigate the impact of board skill diversity (BSD) on corporate environmental responsibility (CER). In addition, this study explores the moderating effects of formal regulatory pressure and informal media pressure. Design/methodology/approach This study uses Chinese high polluting companies as the sample and uses regression analysis. Robustness checks, including instrumental variable regression, Heckman two-stage model and propensity score matching method, are performed to test the robustness of the results. Findings The findings suggest that BSD significantly improves CER performance. Both formal regulatory pressure and informal media pressure strengthen the positive impact of BSD on CER. Further channel analyses reveal that BSD improves CER performance by promoting corporate proenvironmental behaviors rather than by restricting environmental violations; skill diversity of executive directors has a more significant effect on CER than that of independent directors. Finally, the moderating effect of regulatory pressure is only significant after the implementation of the Environmental Protection Law, and the moderating effect of media pressure mainly concentrates on negative media coverage. Practical implications The involvement of directors with more diverse skills is essential to improve corporate proenvironmental behaviors. Companies should select qualified directors with different skills to further improve their performance on environmental protection and sustainable development. Social implications Regulators and standard-setters should develop efficient guidelines on corporate board governance to enhance the positive role of companies in environmental and sustainable development. Originality/value This study broadens the research on the determinants of CER by examining the influence of BSD on CER and the moderating roles of various stakeholder pressures, thereby providing a deeper understanding of corporate environmental performance and sustainable development.

Bank agglomeration and corporate environmental responsibility performance: Evidence from Chinese bank branch data

While corporate environmental responsibility (CER) has attracted widespread attention in recent years, there is still very little understanding as regards whether bank agglomeration affects CER practices. This study has measured the agglomeration of bank branches around Chinese listed enterprises from 2011 to 2020 using Python and the Baidu Map API. For the first time, the study has revealed that, bank agglomeration can have a positive impact on CER practices by reducing financial constraints on enterprises and fostering green business practices. This impact is more significant for private enterprises, enterprises with high costs of equity, enterprises in non-pollution-intensive industries, and enterprises in highly marketized regions. CER performance can be better enhanced by the clustering of state-owned, local, and foreign bank branches around enterprises. In addition, the entry and exit of bank branches can improve CER performance as it can foster the effective allocation of financial resources, and this effect is more evident for private enterprises. To conclude, this study has evaluated the value of bank branch evolution for the environment and society of emerging countries.

Board gender diversity and family firms' corporate environmental responsibility: does "critical mass" matter?

The current study investigates the impact of board gender diversity (BGD) on family firms' (FFs) engagement in corporate environmental responsibility (CER) practices. The role of BGD in CER policies has been explored in light of critical mass theory by identifying the threshold of women share on board that can influence the environmental commitment of FFs. By employing a fixed-effect (FE) regression analysis on a global sample of 171 FFs, over the 2015-2020 study period, our findings show that when BGD reaches a certain threshold, i.e. critical mass, the CER engagement of FFs increases. These evidences advance prior literature on the link between BGD and CER while providing additional indications for managers, policy makers and FFs seeking the best CER performance.

The impact of management’s characteristics on corporate environmental responsibility performance of energy systems in the digital age—Evidence from China’s traditional energy listed companies industry

China is promoting green economic development and the transformation of polluting enterprises to environment-friendly. As an important polluting industry, energy companies are imminent to improve their corporate environmental responsibility performance(CERP). However, corporate strategic decisions are made by the senior management team and market environment such as the digital economy also play a crucial role. In order to study the relationship between management’s characteristics and CERP and the role of the digital economy, this paper selects 2010–2019 listed companies in the traditional energy industry in A-shares as the research object, and conducts an empirical analysis on the characteristics of their managers and the CERP. The results show that during the Thirteenth Five-Year Plan period, in the stage of rapid development of the digital economy, CERP is significantly improved, the gender diversity and educational background of managers have a significant positive impact on the CERP, and the age is negatively related to the CERP. From this point of view, it is suggested that companies should promote young management, increase the proportion of female management, and give priority to those with higher education.

Corporate environmental responsibility and bank loans

AbstractDrawing on both qualitative analyses of banks' sustainability reports and quantitative analyses of 11,538 bank loans from 1993 to 2018, we explore interactions between corporate environmental responsibility (CER) and bank loan contracting. We find CER dominates how corporate social responsibility (CSR) affects bank loans. We propose a two‐way relationship between CER and bank loans. Firms with strong CER performance receive cheaper bank loans due to banks' environmental risk management efforts. These banks provide services to corporate borrowers that have a positive influence on borrowers' ongoing environmental performance.

Green finance and corporate environmental responsibility: evidence from heavily polluting listed enterprises in China.

Green finance is not just a global trend, but it has become an important channel for industrialized countries to achieve sustainable growth. However, few studies have discussed the environmental governance effects of green finance from the micro-firm level. Based on the data of Chinese A-share listed firms in heavily polluting industries, we, combining with property rights and environmental regulation, empirically research the influence of green finance on corporate environmental responsibility (CER) performance. Results indicate that green finance has a significant negative effect on the environmental responsibility of heavily polluting firms. The result remains after a series of robustness tests. In addition, property rights and environmental regulation play a moderating role in the above relationship. The negative impact of green finance on CER is stronger in private firms and firms in areas with low environmental regulation intensity. Moreover, we observe that green finance decreases the CER performance of heavily polluting firms by increasing financing constraints, reducing environmental investment, and diminishing technological innovation. This study identifies the external factors that influence CER and also provides implications and theoretical support for the government to improve the setting and the implementation of green finance policy in the future.

Does Supply Chain Concentration Affect the Performance of Corporate Environmental Responsibility? The Moderating Effect of Technology Uncertainty

With the development of society and the improvement of environmental consciousness, the performance of corporate environmental responsibility (CER) has elicited increasing attention in recent years. In previous studies, the exploration of the antecedents of CER is far less evident than the exploration of its results, and only few studies have investigated what determines CER engagement from the perspective of supply chain concentration (SCC). Using data from 2413 firms in China from 2013 to 2019, our study uses the fixed effect model and performs multiple robustness tests to examine the impact of SCC on the fulfillment of CER, its transmission mechanism, and the moderating role of technology uncertainty (TU). Empirical results show that SCC has a pivotal negative impact on CER performance, wherein both supplier concentration (SUP) and customer concentration (CUS) are detrimental to CER performance. Further mechanism analysis shows that such negative effect can be explained by the adverse effect of SCC on the operating cash flow (OCF), in which OCF has a partial mediating effect. Moreover, the negative impact of SCC on CER performance is more significant when the uncertainty of firms’ technological environment is stronger. Our study opens the transmission “black box” between SCC and CER performance and incorporates the behaviors of firms, inter-firm relationships, and environmental factors into the same research framework, and provides a theoretical guidance for management practices.

Anti-corruption and corporate environmental responsibility: Evidence from China’s anti-corruption campaign

Taking advantage of China’s vigorous anti-corruption campaign implemented in 2013, this study examines the impact of anti-corruption activities on the corporate environmental responsibility (CER) performance of listed Chinese enterprises from 2010 to 2016. The empirical analysis employs a Difference-in-Differences design to identify the causal effect by using the anti-corruption campaign as an exogenous policy shock. Results indicate that China’s unprecedented anti-corruption campaign launched in 2013 significantly improves the CER performance of high-corruption enterprises. Such an effect is most evident for state-owned enterprises, especially local government-owned ones and those in pollution-intensive industries. These results remain after a series of robustness tests. The mechanism results suggest that the promotion effects of the anti-corruption campaign on CER performance can be achieved through environmental regulations, corporate rent-seeking, and innovation behaviors. Moreover, anti-corruption improves the profitability of enterprises, but the effect is significantly offset by increased CER activities.

The impact of corporate environmental responsibility on corporate cash holdings: evidence from the most polluting listed companies in China

PurposeThe purpose of this paper is to examine the impact of corporate environmental responsibility (CER) on corporate cash holdings. This paper also investigates the moderating effects of ownership type and institutional environment between CER and corporate cash holdings.Design/methodology/approachThis study uses the data of the most polluting listed companies on the Shanghai and Shenzhen stock exchange markets over the period 2010–2019. CER data from Hexun.com (a professional CSR evaluation system) are used to measure CER performance. Two proxies are used to measure the level of cash holdings simultaneously, where CASH1 is calculated as the ratio of cash and cash equivalents to total assets, and CASH2 is calculated as the ratio of cash and cash equivalents to net assets (total assets minus cash and cash equivalents). Finally, multiple regression analysis is applied to test the research hypotheses.FindingsThe results show that environmentally responsible companies hold substantially less cash, and the result is statistically significant and robust even after using firm fixed effects and applying alternative measures of cash holdings or alleviating potential endogeneity. In addition, the results of cross-sectional tests show that the negative relation between CER and corporate cash holdings is concentrated among non-state-owned enterprises, and firms in provinces with more developed institutions. Furthermore, the result of the analysis of the economic consequence shows CER significantly increases the value of cash holdings.Research limitations/implicationsThis study focuses on China's institutional context, which limits the generalizability of the findings to other countries. However, the objective of this research can be studied in other institutional settings, so the above limitations provide a springboard for further research. Furthermore, the environmental protection investment, green technology innovation, and even pollutant discharge of companies can also be important indicators to measure the performance of firms in fulfilling their environmental responsibilities, which can be considered in future research.Practical implicationsThe findings of this study may help company management in China to establish a correct view of environmental responsibility to achieve corporate value creation and corporate sustainability. And our research can also provide the policy reference value for the Chinese government to further improve environmental protection policies and systems, guide enterprises to conduct green production to realize the country's vision of an environmentally friendly society.Originality/valueBased on the current background that countries in the world advocate the development of a green economy, this is the first study to examine the impacts of the environmental responsibility of the most polluting companies on corporate cash holdings and the value of cash holdings in the context of China, an emerging market.

Differentiated environmental regulations and corporate environmental responsibility: The moderating role of institutional environment

Environmental regulations (ERs) manifest in three main types: command-and-control ER (CMCER), market-based ER (MBER) and informal public ER (IPER). This article analyzes the impact of each type of ER on corporate environmental responsibility (CER) performance, and investigates the moderating effects of firms’ institutional environment on the relationship between ERs and CER. Using data from Chinese listed companies between 2009 and 2016, we found that all three types of ERs are positively related to CER performance. Such effects are more pronounced in regions with high marketization, industries with fierce product market competition and in environmentally sensitive industries, but are weakened by regional economic growth pressures. The moderating effect of corporate ownership structure on the relationship between ERs and CER is diverse, in that the impact of CMCER on the CER of non-state-owned enterprises (non-SOEs) and state-owned enterprises (SOEs) is basically the same, but the impact of MBER and IPER on the CER of non-SOEs are significantly greater than that of SOEs. Further subdivision found that the impact of ERs on the CER of central SOEs is higher than that of local SOEs, and that political connections weaken the impact of ERs on the CER performance of non-SOEs. Using the mandatory disclosure policy as an instrumental variable, a Heckman two-stage model is used to overcome the endogeneity problem caused by self-selection bias. Robustness tests controlling for missing variable bias and the ordered probit/logit model further support our conclusions. Our research shows that the Chinese government should be committed to creating a supportive institutional environment to ensure the effectiveness of their ERs in pursuit of improved CER performance and sustainable development.

Corporate Environmental Responsibilities and Executive Compensation: A Risk Management Perspective

AbstractIn this article, we examine how firms design executive compensation in light of their risk environment. Prior literature shows that corporate environmental responsibility (CER) of a firm inversely affects firm risk. We argue that firms with better CER performance benefit from the reduced firm risk, and therefore are more likely to provide greater managerial risk‐taking incentives to encourage the risk‐averse managers to undertake risk‐increasing but positive net present value (NPV) investments. Consistent with our hypotheses, we find that a firm’s CER rating is positively associated with its CEO risk‐taking incentives (vega) in the following year. We also document cross‐sectional variations in the CER‐vega relationship, that is, a weaker association in the controversial industries. This study contributes to the literature by investigating the role of CER on executive compensation design from the perspective of risk management.

Corporate Environmental Responsibility and Environmental Non-Governmental Organizations in China

In China, environmental non-governmental organizations (ENGOs) play an important supervisory role to address ecological issues together with government regulation and enterprise implementation. This study examines the effect of ENGO presence on corporate environmental responsibility (CER) performance, along with internal factors as covariate variables. With a sample of 677 enterprises, it operationalizes the independent variable in terms of the number of ENGOs within certain distances from each enterprise, and the dependent variable based on the corporate social responsibility report using the specific criteria in the Global Reporting Initiative (GRI) sustainability reporting guidelines. The results of Tobit regression analyses indicate that ENGO presence is conducive to CER performance, and asset size, power concentration, and industry type also make differences. The findings suggest that ENGOs are helpful in solving environment issues by bridging the gap between private and public sectors. Theoretical and practical implications are discussed.

Constructing performance measurement indicators to suggested corporate environmental responsibility framework

Leading enterprises worldwide are proactively fulfilling environmental protection. This trend has elicited international attention. The corporate environmental responsibility (CER) framework was constructed based on the strategy these enterprises executed. This conceptual framework precisely determined current international advanced CER content. However, understanding the true intention of businesses that practice environmental management and protection through the CER framework is difficult, thereby making CER performance measurement indicators crucial. However, the lack of active CER performance measurement indicators resulted in the inability to reflect fully the effects of industry situation and business development on the living environment. Hence, this situation signals the urgency to construct CER performance measurement indicators that reflect fully industry situation and social needs. This study aims to address the deficiencies of CER performance measurement indicators in the academic circle, and construct a set of active CER performance measurement indicators that fully reflect the effects of industry situation and business development on the living environment. For this reason, this study employs content analysis method to establish CER performance measurement indicators based on the CER framework. This indicator provides an effective and applied CER performance measurement tool and offers the government with foresighted concepts of environmental protection.

Corporate Environmental Responsibility: A Legal Origins Perspective

In this study, we examine the determinants of corporate environmental responsibility (CER), as well as the relationship between legal systems and CER as measured by a unique set of global environmental cost data. Results of our analyses show that firms’ legal origins affect CER, which requires a long-term management perspective. Specifically, our results indicate that civil law firms exhibit significantly higher levels of CER than common law firms. In addition, results of an auxiliary test suggest that manager shareholding has a significant, nonlinear relationship with CER. The association between a firm’s legal origin and its CER performance remains robust after controlling for the effects of managerial ownership and issues related to endogeneity. Our findings imply that although the majority of corporate law studies in the past few decades provide support for the common law system emphasizing the maximization of shareholder value and investor protection, the civil law system stressing the maximization of stakeholder wealth and the importance of CER may become more influential in the coming decades as CER becomes central to firms’ operations.