Corporate governance and carbon performance: role of carbon strategy and awareness of climate risk

Abstract

Abstract This study investigates whether corporate governance (CG) leads to improved corporate social responsibility (CSR) in relation to carbon performance. We draw on multiple theoretical lenses for CSR and use a sample of the top 350 listed UK companies. Our results show that overall CG quality has a discernible influence on carbon performance, based on outcome‐based carbon emissions. Our empirical findings and inferences still hold with an action‐based performance measure as well. In addition, we find that the relationship between CG and carbon performance is significantly moderated by carbon strategy and managerial awareness of carbon risk. Our evidence supports the claim that reforms of CG in the UK have promoted CSR behaviour in carbon performance, and this insight is not documented elsewhere.