Board Sustainability Committees, Climate Change Initiatives, Carbon Performance, and Market Value

We examine the interrelationships among board sustainability committees, process-based climate change initiatives, outcome-based carbon performance, and market value through the lens of economic- and social-based theoretical perspectives. Using a panel dataset of 8408 observations from 35 countries between 2002 and 2019, we find that higher levels of actual greenhouse gas (GHG) emissions are negatively associated with market value. Further, we reveal a positive association between process-based climate change initiatives and market value. We then provide evidence that process-based climate change initiatives are positively related to increased levels of GHG emissions. We also observe that the presence of a board sustainability committee has a positive impact on market value, but does not seem to improve outcome-based carbon performance. Finally, we show that the predicted relationships vary across different country-groups, sector-groups, and periods. Our empirical findings are robust to alternative measures, endogeneities, and sample selection bias. Overall, our evidence supports the symbolic legitimation/greenwashing view, in that firms are likely to employ process-based climate change initiatives under a symbolic approach to create positive impressions among stakeholders and protect their legitimacy.