Determinants of companies' commitment to climate change: Evidence based on European listed companies

• Published date: 01 August 2024
• Author: Chiara Xhindole,Lara Tarquinio
• Date: 01 August 2024
• DOI: http://doi.org/10.1002/pa.2938

RESEARCH ARTICLE

Determinants of companies' commitment to climate change:

Evidence based on European listed companies

Chiara Xhindole | Lara Tarquinio

Department of Economic Studies, “G.

d'Annunzio”University of Chieti-Pescara,

Pescara, Italy

Correspondence

Chiara Xhindole, Department of Economic

Studies, Viale Pindaro 42, “G. d'Annunzio”

University of Chieti, Pescara, Italy.

Email: chiara.xhindole@unich.it

Climate change is a highly topical issue, and companies are increasingly required to report

on their climate actions. This study assesses the influence of several factors affecting the

companies' commitment towards climate change mitigation, adaptation, and transparency

(i.e. CDP Integrtaed Performance Score). Therefore, by analysing the determinants of cli-

mate change commitment, the research aims to provide evidence and further insights on

companies' responsiveness to climate challenges. Data are collected from Bloomberg's

ESG database, and multiple linear regression analysis is performed on a sample of 3000

European-listed companies responding to the carbon disclosure project (CDP) question-

naire. The results show that CDP Integrated Performance Score is associated with green-

house gas emissions disclosure, Global Reporting Initiative (GRI) compliance, the presence

of a Corporate Social Responsibility (CSR) committee and women on board, the number of

employees, board and firm size. By contrast, assurance and ROE are non-significant deter-

minants for our sample. This study contributes to the existing research on climate change

disclosure providing further insights on companies' climate change action. The findings are

valuable for managers and regulators in promoting sustainability strategies and improving

environmental performance and climate transparency.

KEYWORDS

CDP, climate change, European companies, GHG emissions, transparency

1|INTRODUCTION

Climate change is a relevant topical issue. It is widely considered the

most global challenge involving governments and corporations in

the complex management of climate change issues and the develop-

ment of strategies for mitigation and adaptation (IPCC, 2023).

Many European and international organisations emphasise the

urgency of taking action to avoid the negative effects of extreme cli-

mate phenomena on human life and safeguard the future of Earth.

Following the Green Deal target (EC, 2019a), the Fit for 55 package

aims to align the European Union (EU) legislation to reducing net

greenhouse gas (GHG) emissions by at least 55% by 2030 through dif-

ferent proposals; these include reforming the EU emission trading sys-

tem, employing sustainable transports, adopting renewable energy,

and increasing energy efficiency. In this regard, the United Nations

stresses the importance of cutting GHG emissions to meet the

requirements of the Paris Agreement on keeping global warming

below 1.5C above the pre-industrial level (UN, 2022). Furthermore,

the Intergovernmental Panel on Climate Change (IPCC) marks climate

change as humanity's code red warning due to increased droughts,

floods, and heatwaves (IPCC, 2023; UN, 2022) impacting global eco-

systems. Sustainable Development Goal (SDG) 13 on climate action

also acts in this direction, encouraging countries, governments and

organisations worldwide to integrate specific measures into their

strategies and policies (UN, 2015).

The widespread and clear perception of the damages produced

by human activities, mainly through emissions of greenhouse gases,

are increasing pressures on regulators and companies by stakeholders

demanding climate change protection actions (Liesen et al., 2015;

Reid & Toffel, 2009). In particular, investors consider climate change

Received: 21 January 2024 Revised: 3 May 2024 Accepted: 22 June 2024

DOI: 10.1002/pa.2938

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium,

provided the original work is properly cited.

© 2024 The Author(s). Journal of Public Affairs published by John Wiley & Sons Ltd.

J Public Affairs. 2024;24:e2938. wileyonlinelibrary.com/journal/pa 1of13

https://doi.org/10.1002/pa.2938