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The role of AI capabilities in environmental management: Evidence from USA firms

Author

Listed:
  • Jiao, Anqi
  • Lu, Juntai
  • Ren, Honglin
  • Wei, Jia

Abstract

This study investigates the role of Artificial Intelligence (AI) capabilities in influencing firms' greenwashing behaviors. We find a robust negative association between firms' AI capabilities and unrepresentative environmental disclosure. An instrumental variable approach is employed to establish causality. The effects are more pronounced for firms (1) with a greater exposure to regulatory climate risk, (2) managed by Republican-leaning managers, (3) with stronger governance structures, (4) possessing greater product market pricing power, (5) operating in multiple regions, and (6) with CEOs with higher pay-for-performance sensitivity. We further demonstrate that AI capabilities aid firms in transitioning to green operations through engaging in green and clean innovation. Finally, we find that AI capabilities correlate with lower greenhouse gas emissions. Overall, our findings shed light on the real impact of AI-related technologies in the energy industry.

Suggested Citation

  • Jiao, Anqi & Lu, Juntai & Ren, Honglin & Wei, Jia, 2024. "The role of AI capabilities in environmental management: Evidence from USA firms," Energy Economics, Elsevier, vol. 134(C).
    • Handle: RePEc:eee:eneeco:v:134:y:2024:i:c:s014098832400361x
    DOI: 10.1016/j.eneco.2024.107653
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    More about this item

    Keywords

    Artificial intelligence; IT investment; Greenwashing; Environmental management; Innovation;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management

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