Under the spotlight: The peer standard in CSR and the role of public attention

Abstract

As sustainability takes center stage in business strategies, firms lagging behind their peers on environmental initiatives are strongly motivated to bridge the gap. Analyzing the U.S. sectors primarily responsible for CO₂ emissions, we show that environmentally lagging firms increase the efforts to reduce emissions and adopt eco-friendly materials in the subsequent year. Interestingly, this phenomenon becomes significantly more pronounced among companies exposed to higher levels of consumer interest as measured by Google search volumes. Our finding suggests that lagging firms under greater public scrutiny recognize the need to address their sustainability deficiencies to maintain competitiveness and corporate reputation.