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Strategy researchers are increasingly paying attention to corporate climate change management with growing expectations from shareholders and other stakeholders. We examine carbon targets, a critical element in climate change management and note three key findings. First, roughly half of active carbon targets change before reaching the target year. On average, changed targets lead to higher subsequent emissions, especially if the change involves a lower per annum reduction, or target relaxation. In sharp contrast, target changes to a higher per annum reduction, or more aggressive targets, do not lower emissions. Second, our mechanism analysis reveals that the non-findings are closely associated with adoption of net zero and scienced based targets, two rapidly growing types of enhanced carbon targets. Firms that adopt these practices use carbon offsets to a greater extent than those do not, and their emissions tend to increase in the following years. Third, we find that adoption of these practices has significantly accelerated in the past three years, with this recent adoption associated with greater emissions increases, particularly in carbon emissions-intensive industries. We discuss implications of these for the emerging field of climate change and corporate sustainability strategy, and highlight opportunities for future research. [ABSTRACT FROM AUTHOR]

Institutional investors have increased calls for firms to address carbon emissions, leading more firms to disclose formal carbon emissions reduction targets. Extant research offers mixed evidence on carbon target effectiveness in ultimately attaining meaningful emissions reductions. While recent research has revealed new insights into outcomes associated with environmental performance incentives in executive compensation, we have yet a limited understanding of the relationship of climate-related incentives on firm-level emissions. This study draws on agency theory to articulate mechanisms by which climate-related management incentives drive corporate carbon emissions performance management. Using data on corporate carbon targets and climate-related executive incentives from CDP, we find that incentive programs are associated with more difficult firm-level carbon targets, but that meaningful progress toward firm-level carbon target attainment may require specific targeted incentive metrics, and executives may exploit more subjective incentive metrics to enhance compensation without directly reducing emissions. [ABSTRACT FROM AUTHOR]

This symposium presents several papers addressing the measurement of corporate climate change governance and ESG more broadly. * Green neighbors? Local vs firm-level determinants of corporate greenhouse gas emissions reduction * Presenter: Benjamin Leffel; U. of Michigan * An exploration of GHG target setting over time * Presenter: Miron Avidan; HSG U. of St. Gallen * How do Firms Respond to Ratings? The Influence of Rating Methodology on Disclosure Behavior * Presenter: Patrick J. Callery; U. of Vermont, Grossman School of Business, US [ABSTRACT FROM AUTHOR]

Carbon emissions reduction targets are becoming a de rigueur component of corporate sustainability disclosures. We explore what carbon targets entail and whether they drive firms toward meaningful reductions of carbon emissions by analyzing target data disclosed by firms to CDP at multiple levels. We start by displaying first-order parameters that are directly disclosed by firms and then illustrate implicit, second-order factors derived from the first-order parameters, which provide a fuller picture of carbon targets and the aggressiveness of emissions reductions embodied therein. Further, we examine temporal dynamics by developing a target matching algorithm that enables us to more directly track targets across years since firms often report multiple targets in a given year and change target parameters over time, blurring comparisons and analyses at the firm-year-target level. We demonstrate that firms' self-reported claims of target attainment frequently contradict our calculations of actual target attainment based on disclosed carbon emissions and firms regularly alter target parameters from year to year with the adjusted targets becoming less aggressive over time. [ABSTRACT FROM AUTHOR]

The concept of induced innovation suggests the ability for policy makers to design and implement economically efficient regulation, both limiting negative environmental impacts from corporate activity and providing firms opportunities to improve performance through innovation in regulatory response. While extant research has substantially addressed aspects of both induced innovation among regulated private sector firms and managerial innovation among public sector organizations, we know relatively little about the nature of innovation taken by public sector entities in response to environmental regulation. An improved understanding of induced innovation in the public sector is important because public organizations are increasingly subject to regulation, with implications for regulatory efficiency and local government viability. We address the problem by analyzing prevalence and determinants of induced innovation among both publicly and privately owned entities subject to regulation in a unique context: methane emissions from municipal solid waste landfills in the United States. We find that induced innovation is more prevalent among public than private organizations, whereas private organizations are more effective at implementing induced innovation projects. We also find unexpected effects of various institutional factors on innovation uptake. The study contributes to literatures on induced innovation and public sector innovation, provides insights to guide future research, and offers guidance for efficient regulatory design. [ABSTRACT FROM AUTHOR]

This study develops and tests a set of novel theoretical predictions about the conditions under which key resources undermine new venture success. To do this, we revisit the presumption of investment in core technology innovation and complementary assets in a nascent and rapidly growing industry. Drawing on insights from control of complementary assets and innovative business models, we suggest that key resources for the boom period of industry emergence do not necessarily lead to greater rewards during the industry shakeout. Our empirical analysis of exit of new ventures in the solar energy sector supports our approach: startups with core domain positioning, venture capital investment, and technological innovation are less likely to survive and to exit successfully during the period of industry shakeout. Highlighting an understudied paradox in practical settings, this study offers several contributions to knowledge of firm resources and complementary assets, and motivates new lines of inquiry in technology and business model innovation. [ABSTRACT FROM AUTHOR]

Stakeholders increasingly pressure firms for action and performance along issues of concern; transparency is a primary mechanism by which firms communicate about these issues with stakeholders. But firms face a tension between satisfying stakeholder demand for greater transparency and maintaining secrecy when those relevant issues are focal to firm motives for information asymmetry or competitive advantage. This study addresses different strategies firms employ to balance stakeholder and competitive pressures for greater transparency with maintaining secrecy. We develop a typology of secrecy strategies along dimensions of non-financial performance with general relevance to multiple stakeholder groups, hypothesize several antecedents of these strategies, and test those hypotheses using rigorous empirical analyses of firm participation in a prominent voluntary disclosure mechanism. Findings indicate that firms employ different modes of secrecy strategies depending on the prevalent modes of external pressures for transparency. The study contributes to extant theory in competitive secrecy and transparency strategies, and provides insight into nature of secrecy strategies for non-financial information disclosures. [ABSTRACT FROM AUTHOR]

Intermediated voluntary disclosure is an emerging institution that addresses investor and other stakeholder demand for credible information on corporate policies and performance along dimensions of societal interest. Building upon substantial literatures on proprietary corporate voluntary disclosure, research has begun to rigorously document the antecedents and outcomes of intermediated disclosure. However, theory has remained largely silent on a new category of perverse incentives driving firm engagement with intermediated disclosure programs. Moreover, research has not definitively addressed the degree to which intermediated disclosures are verifiable or truthful and the associated significance for long-term institutional credibility. This study uses forensic analysis of detailed corporate disclosures to one prominent intermediary to develop and identify novel constructs that establish evidence of misleading disclosures. Findings demonstrate that firms routinely manipulate intermediary ratings methods to obtain endorsement, undermining institutional and societal goals. Results also identify several factors that may improve intermediary and stakeholder ability to differentiate substantive disclosures from symbolic. This study contributes to our understanding of firm incentives and strategies for engagement in voluntary institutions and the ability of those institutions to improve governance. It also identifies new opportunities for theoretical and empirical research and offers guidance for improved oversight of voluntary corporate disclosure. [ABSTRACT FROM AUTHOR]

Voluntary environmental programs offer opportunities for policy-makers, corporate stakeholders, and firms themselves to improve environmental outcomes valued by the public without resorting to regulatory mandates. Prior research has addressed a range of antecedents for a broad array of voluntary programs, enhancing knowledge of how stakeholders engage firms on substantive issues of public importance, and clarifying how firms leverage program participation to enhance firm outcomes. However, adoption of programs by firms is dynamic, and stagnant or declining participation rates may threaten program longevity when firms do not realize the net benefits expected at time of adoption. While successful voluntary programs are often mutually beneficial for firms and stakeholders, we find that prior literature has not sufficiently addressed the factors that compel firms to drop out. This study uses survival analysis to determine the drivers of firm disengagement from a prominent voluntary environmental program. Findings indicate that firm transparency is a powerful commitment device driving sustained firm participation, and that evaluative ratings of the quality of participation motivates top performers in high-impact industries to maintain adoption. Our study contributes to theory on stakeholder management and voluntary program participation, while offering guidance on institutional design of programs for long-term performance. [ABSTRACT FROM AUTHOR]

Understanding how information transparency influences stakeholder perceptions is an increasingly important topic for firms that face pressure to self-report on their social responsibilities. As external constituencies other than shareholders become an increasingly important mechanism for social control, understanding the way that stakeholders attribute motivations behind information disclosure will help firms to not only improve financial performance, but also to mitigate reputational reputations. Drawing on attribution and stakeholder theories, we develop theoretical rationale for why different stakeholder groups make heterogeneous attributions over different characteristics of corporate transparency, affecting not only the firm's market value, but also their reputation. Using datasets on corporate environmental disclosures (CDP) and performance (ASSET4), we find that not only do various stakeholders evaluate information disclosure differently, but stakeholder groups also respond differently to distinct characteristics of transparency. Furthermore, we show that these stakeholder responses are often nonlinear in nature, suggesting that transparency strategies in stakeholder management are more nuanced than previously thought. [ABSTRACT FROM AUTHOR]

This study examines firm strategic motivations to engage in corporate social responsibility (CSR) through the lens of peer effects. The concept of CSR has long intrigued management scholars; the literature is replete empirical analyses of corporate social performance (CSP) and has established a rich set of theories to explain why profit- oriented firms seek to voluntarily provide public goods beyond the requirements of law. Two prominent lines of research suggest that firms engage in CSR for profit motives and for ensuring legitimacy with stakeholders. However, many disagreements exist between studies in terms of the degree to which these motivations are conflicting or complementary, and the contextual drivers in which firms seek to improve performance. To address these concerns, in this study I develop a theoretical framework of firm strategic motivations based on performance feedback relative to a purposefully selected group of relevant peer firms. This framework yields a number of predictions regarding firm behavior that I test using an empirical model of peer effects based on tenets of the behavioral theory of the firm. The model uses instrumental variables estimation, based on unique properties of an innovative approach to industry peer group definition, to resolve endogeneity concerns not fully addressed by extant literature on performance feedback and aspirations. Results indicate that purposeful selection of peer groups based on relevant strategic context may uncover important aspects of firm behavior that are otherwise masked by generic definition of industry peers. The study also finds that the usage of conventional aggregate measures of CSP may likewise mask subtleties of firm strategic behavior that are evident along more narrowly defined dimensions of CSP. [ABSTRACT FROM AUTHOR]

Information intermediaries have emerged as credible institutions for voluntary corporate disclosures of non-financial performance. However, some studies have shown that these disclosure mechanisms do not always lead to corresponding improvements in firm performance, raising concern regarding actual transparency provided by firm disclosures. This study seeks to demonstrate whether firms leverage the credibility of voluntary disclosure mechanisms to increase competitive advantage without substantive improvements in performance. We employ multiple empirical methods to detect evidence of strategic disclosure within one prominent mechanism (CDP, or Carbon Disclosure Project). Results indicate that firms tend to provide misleading performance disclosures in order to maximize scores without substantive performance improvements. The study contributes to our understanding of strategic voluntary disclosure and seeks to inform improved design of third party disclosure institutions. [ABSTRACT FROM AUTHOR]

This study finds evidence within a widely used dataset of independent corporate social performance (CSP) ratings that the actions of a firm's industry peers influence its subsequent choice of CSP. Using a unique empirical approach, I am able to separately identify endogenous peer effects from both exogenous firm characteristics and the strong path dependence in a firm's choice of CSP over time. The results indicate that firm behavior is subject to peer influence in the selection of CSP, supporting other emerging evidence of peer effects in the determination of non-market corporate strategies. This study is among the first to identify peer effects in CSP, and contributes to a notable research agenda on the drivers of corporate social responsibility. [ABSTRACT FROM AUTHOR]

Environmental employee engagement programs promise to raise morale, improve environmental conditions and strengthen companies' financial performance. TD Bank's Green Leaders was a peer communication program designed to improve the bank's environmental employee engagement programs. The analyses use a difference in difference field research design in which employees were placed in either a treatment group that received the Green Leaders program or a control group that did not. Pre- and post-test surveys measured employees' environmental attitudes, engagement, and participation in environmental employee engagement programs and activities. Treatment group employees showed increases in pride in TD Bank's environmental accomplishments and initiatives, confidence in discussing TD Bank's environmental record with external stakeholders, awareness of and participation in TD Bank's environmental employee engagement programs, and general attitudes about environmental issues. These changes were significantly greater than what occurred in the control groups, suggesting that the Green Leaders program was generally effective. [ABSTRACT FROM AUTHOR]