Abstract
This study investigates the relationship between Emission Reduction Target Disclosures (ERTDs) and firm-level Total Factor Productivity (TFP). Using a panel dataset of 2,637 U.S. firms from 2016 to 2022, we find that ERTDs are positively associated with higher productivity. This relationship is analyzed through the lenses of Dynamic Capabilities Theory, Institutional Theory, and Stakeholder Theory, which explain how firms leverage sustainability commitments to enhance efficiency, legitimacy, and stakeholder trust. Further, in this study, we aim to explore the mechanisms through which ERTDs influence productivity and assess the broader implications of corporate sustainability commitments for managers, investors, and policymakers.