IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i14p11155-d1196174.html
   My bibliography  Save this article

Institutional Drivers of Voluntary Carbon Reduction Target Setting—Evidence from Poland and Hungary

Author

Listed:
  • Anna Doś

    (Department of Corporate Finance and Insurance, University of Economics in Katowice, 40-287 Katowice, Poland)

  • Joanna Błach

    (Department of Corporate Finance and Insurance, University of Economics in Katowice, 40-287 Katowice, Poland)

  • Małgorzata Lipowicz

    (Department of Corporate Finance and Insurance, University of Economics in Katowice, 40-287 Katowice, Poland)

  • Francesco Pattarin

    (Dipartimento di Economia “Marco Biagi”, Universita degli Studi di Modena e Reggio Emilia, 41125 Modena, Italy)

  • Elisa Flori

    (Dipartimento di Economia “Marco Biagi”, Universita degli Studi di Modena e Reggio Emilia, 41125 Modena, Italy)

Abstract

Governments worldwide have launched climate policies to mitigate greenhouse gas emissions (GHG). These policies aim to enhance businesses to be active actors in the process of decarbonisation. Therefore, the main objective of this paper is to identify the drivers of voluntary corporate decarbonisation illustrated by climate target-setting practices. In particular, this paper aims at diagnosing whether European Union (EU)-wide and country-level policies foster material corporate commitment to mitigating the carbon footprint in two countries that are exceptionally heavily dependent on fossil fuels: Poland and Hungary, which are characterised by a specific political-economic situation. This analysis focuses on policies related to the EU sustainable finance initiative that enhances companies to voluntarily reduce their GHG emissions: (1) sustainable financial sector, (2) corporate disclosure, and (3) corporate governance policy. At the country level, the national policies for state-owned enterprises (SOEs) are analysed. The empirical research is conducted based on the financial and economic data for a group of Polish and Hungarian publicly listed companies exposed to these regulations. The exposure to certain policies is approximated through selected corporate characteristics. Logistic regression analysis is applied to firm-level data gathered from Refinitive and corporate reports. The dataset covers the period 2014 to 2021, with 214 data-points. The response variable is a binary indicator of whether a company sets emission targets. The empirical research proved that state ownership, belonging to the financial sector, and performance-oriented corporate governance factors have a significantly negative impact on the probability of a company setting target emissions. On the other hand, the company’s size and leverage have a strong positive impact on the probability of setting emission targets. Also, it was confirmed that after 2020 the frequency of corporate target-setting in Poland and Hungary increased. Additionally, it was observed that Polish firms are more willing to set climate targets than Hungarian ones. Therefore, from the analysed policies, only the corporate sustainability disclosure policy proved to have a positive impact on the practices of setting climate targets in Polish and Hungarian firms. The policies related to the sustainable financial sector and to state-owned enterprises proved to have a negative impact on the probability of setting climate targets, while for the corporate governance policy, the results are mixed. In this vein, it was shown that, by a majority, policies to stimulate voluntary corporate commitment to decarbonisation are counter-effective in countries characterised by exceptional fossil fuel dependence and particular institutional features. The original value of this study stems from the applied methodology focusing on a mix of policies addressing the deep decarbonisation process in the specific country settings. The presented research contributes to an on-going debate on the drivers of voluntary corporate decarbonisation, in particular the impact that policy mixes framed under the sustainable finance agenda may have on material commitments to GHG emission reduction targets. In this context, the main findings are important for policymakers who are responsible for creating and implementing policy measures devoted to the deep decarbonisation process. It is recommended that policymakers should consider national specificities while designing policies for a Europe-wide net-zero transition and account for potential tensions arising from different goals as they may have impact on the effectiveness of the decarbonisation process. Future research may focus on the verification of the observed relationships between variables on a larger sample of the European firms to identify the key drivers of deep corporate decarbonisation.

Suggested Citation

  • Anna Doś & Joanna Błach & Małgorzata Lipowicz & Francesco Pattarin & Elisa Flori, 2023. "Institutional Drivers of Voluntary Carbon Reduction Target Setting—Evidence from Poland and Hungary," Sustainability, MDPI, vol. 15(14), pages 1-27, July.
  • Handle: RePEc:gam:jsusta:v:15:y:2023:i:14:p:11155-:d:1196174
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/14/11155/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/15/14/11155/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. McCauley, Darren & Pettigrew, Kerry A. & Todd, Iain & Milchram, Christine, 2023. "Leaders and laggards in the pursuit of an EU just transition," Ecological Economics, Elsevier, vol. 205(C).
    2. Kern, Florian & Rogge, Karoline S. & Howlett, Michael, 2019. "Policy mixes for sustainability transitions: New approaches and insights through bridging innovation and policy studies," Research Policy, Elsevier, vol. 48(10).
    3. Kivimaa, Paula & Rogge, Karoline S., 2022. "Interplay of policy experimentation and institutional change in sustainability transitions: The case of mobility as a service in Finland," Research Policy, Elsevier, vol. 51(1).
    4. Stefan Ćetković & Aron Buzogány, 2019. "The Political Economy of EU Climate and Energy Policies in Central and Eastern Europe Revisited: Shifting Coalitions and Prospects for Clean Energy Transitions," Politics and Governance, Cogitatio Press, vol. 7(1), pages 124-138.
    5. Matthew P. Johnson & Theresa S. Rötzel & Brigitte Frank, 2023. "Correction to: Beyond conventional corporate responses to climate change towards deep decarbonization: a systematic literature review," Management Review Quarterly, Springer, vol. 73(2), pages 957-957, June.
    6. Lee, Chien-Chiang & Wang, Fuhao & Lou, Runchi & Wang, Keying, 2023. "How does green finance drive the decarbonization of the economy? Empirical evidence from China," Renewable Energy, Elsevier, vol. 204(C), pages 671-684.
    7. Andrea Venturelli & Simone Pizzi & Fabio Caputo & Salvatore Principale, 2020. "The revision of nonfinancial reporting directive: A critical lens on the comparability principle," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3584-3597, December.
    8. Yu, Ellen Pei-yi & Luu, Bac Van & Chen, Catherine Huirong, 2020. "Greenwashing in environmental, social and governance disclosures," Research in International Business and Finance, Elsevier, vol. 52(C).
    9. Wang, Moran & Li, Xuerong & Wang, Shouyang, 2021. "Discovering research trends and opportunities of green finance and energy policy: A data-driven scientometric analysis," Energy Policy, Elsevier, vol. 154(C).
    10. Wang, Haifei & Guo, Ting & Tang, Qingliang, 2021. "The effect of national culture on corporate green proactivity," Journal of Business Research, Elsevier, vol. 131(C), pages 140-150.
    11. Pii‐Tuulia Nikula, 2022. "Beyond compliance – Voluntary climate mitigation by New Zealand firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1456-1464, September.
    12. Matthew P. Johnson & Theresa S. Rötzel & Brigitte Frank, 2023. "Beyond conventional corporate responses to climate change towards deep decarbonization: a systematic literature review," Management Review Quarterly, Springer, vol. 73(2), pages 921-954, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Clara Privato & Matthew P. Johnson & Timo Busch, 2024. "Raising the bar: What determines the ambition level of corporate climate targets?," Climatic Change, Springer, vol. 177(9), pages 1-24, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erli Dan & Jianfei Shen, 2022. "Establishment of Corporate Energy Management Systems and Voluntary Carbon Information Disclosure in Chinese Listed Companies: The Moderating Role of Corporate Leaders’ Low-Carbon Awareness," Sustainability, MDPI, vol. 14(5), pages 1-28, February.
    2. Bai, Rui & Lin, Boqiang, 2023. "Nexus between green finance development and green technological innovation: A potential way to achieve the renewable energy transition," Renewable Energy, Elsevier, vol. 218(C).
    3. Clara Privato & Matthew P. Johnson & Timo Busch, 2024. "Raising the bar: What determines the ambition level of corporate climate targets?," Climatic Change, Springer, vol. 177(9), pages 1-24, September.
    4. Thayla Zomer & Paulo Savaget, 2023. "Disentangling Decarbonisation Ambidexterity: An Analysis of European Companies," Sustainability, MDPI, vol. 15(13), pages 1-17, July.
    5. Hisky Ryan Kawulur & Erwin Saraswati & Abdul Ghofar & Arum Prastiwi, 2024. "Carbon Strategy, Political Connection and Carbon Performance: Evidence from Polluting Industries," International Journal of Energy Economics and Policy, Econjournals, vol. 14(4), pages 251-264, July.
    6. Jörn H. Block & Pramodita Sharma & Lena Benz, 2024. "Stakeholder Pressures and Decarbonization Strategies in Mittelstand Firms," Journal of Business Ethics, Springer, vol. 193(3), pages 511-533, September.
    7. Arsani Alina & Stefan George, 2024. "Energy Transition and European Sub-Models. Restructuring EU Economy," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 18(1), pages 86-101.
    8. William R. Morgan, 2023. "Finance Must Be Defended: Cybernetics, Neoliberalism and Environmental, Social, and Governance (ESG)," Sustainability, MDPI, vol. 15(4), pages 1-21, February.
    9. Hu, Hui & Qi, Shaozhou & Chen, Yuanzhi, 2023. "Using green technology for a better tomorrow: How enterprises and government utilize the carbon trading system and incentive policies," China Economic Review, Elsevier, vol. 78(C).
    10. Olivier Boiral & Marie‐Christine Brotherton & Léo Rivaud & David Talbot, 2022. "Comparing the uncomparable? An investigation of car manufacturers' climate performance," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2213-2229, July.
    11. Xuan Chen & Liang Zhang, 2022. "Do negative environmental media reports increase environmental information disclosures? A comparative analysis based on political connections and market competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2480-2500, September.
    12. Zhang, Dongyang, 2023. "Does green finance really inhibit extreme hypocritical ESG risk? A greenwashing perspective exploration," Energy Economics, Elsevier, vol. 121(C).
    13. Liu, Jiangtao & Zhang, Yi & Kuang, Jia, 2023. "Fintech development and green innovation: Evidence from China," Energy Policy, Elsevier, vol. 183(C).
    14. Wang, Kai-Hua & Zhao, Yan-Xin & Jiang, Cui-Feng & Li, Zheng-Zheng, 2022. "Does green finance inspire sustainable development? Evidence from a global perspective," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 412-426.
    15. Che, Xiao-Jing & Zhou, P. & Chai, Kah-Hin, 2022. "Regional policy effect on photovoltaic (PV) technology innovation: Findings from 260 cities in China," Energy Policy, Elsevier, vol. 162(C).
    16. Monika Klimontowicz & Anna Losa-Jonczyk & Bogna Zacny, 2021. "Banks’ Energy Behavior: Impacts of the Disparity in the Quality and Quantity of the Disclosures," Energies, MDPI, vol. 14(21), pages 1-14, November.
    17. Lee, Chien-Chiang & Wang, Fuhao & Chang, Yu-Fang, 2023. "Towards net-zero emissions: Can green bond policy promote green innovation and green space?," Energy Economics, Elsevier, vol. 121(C).
    18. Angelidis, Timotheos & Michairinas, Athanasios & Sakkas, Athanasios, 2024. "World ESG performance and economic activity," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 93(C).
    19. Anna Maria Lis & Marita McPhillips & Adrian Lis, 2020. "Sustainability of Cluster Organizations as Open Innovation Intermediaries," Sustainability, MDPI, vol. 12(24), pages 1-16, December.
    20. Liu, Changyu & Song, Yadong & Wang, Wei & Shi, Xunpeng, 2023. "The governance of manufacturers’ greenwashing behaviors: A tripartite evolutionary game analysis of electric vehicles," Applied Energy, Elsevier, vol. 333(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:14:p:11155-:d:1196174. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.