Abstract:

This large-scale inductive exploratory study investigates the question of why firms set science-based climate targets (SBTs). Because employing standard theoretical-deductive reasoning to this novel phenomenon results in a paradox, we implement an exploratory study with a broad range of logit and linear probability specifications that unveil two core mechanisms: first, financial resource-dependence from lenders explains SBTs, and this effect becomes stronger contingent on environmental and specific governance performance and on the stringency of environmental regulations. Second, peer effects also explain SBTs, and they become stronger contingent on the firm’s existing environmental performance. We therefore conjecture that the two external drivers–resource-dependence from lenders and peer effects–“activate” internal resources and external institutional drivers, while the latter, left on their own, are ineffective drivers of SBTs.

Please choose your submission type: Full Paper

Primary Track: Sustainable and Responsible Business

Keywords: responsible business,CSR

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Mr. Ahmed Oudaa