Organizational Strategic Responses to Climate Challenges in Global Carbon Management

Abstract

Climate change is the most pressing global issue due to its devastating impact on society. This study aims to identify internal and external organizational factors that influence carbon strategy, both directly and indirectly. Utilizing global carbon data from the Carbon Disclosure Project (CDP), the study incorporates a theoretical framework based on Institutional Theory and the Resource-Based View to examine theoretical discussions on carbon emissions and environmental performance. The dataset spans 17 countries across three geographical regions and includes 852 firm-year observations from 2018 to 2020. Results reveal that carbon integrity leadership and internal carbon pricing do not significantly impact corporate carbon intensity. However, research and development intensity, financial resource slack, and human resource slack exhibit a negative and significant relationship with carbon intensity. Furthermore, moderation results indicate that firms with high carbon emissions have more robust carbon strategies and R&D investments than low-carbon firms. Country-level analysis shows that the emission trading system negatively and significantly correlates with carbon intensity, highlighting its effectiveness as a regulatory mechanism. However, the findings also emphasize that while regulatory enforcement plays a crucial role in carbon reduction, firms require strategic flexibility to adapt their carbon management approaches in response to evolving market conditions and policy frameworks. The study concludes that an effective carbon strategy drives the achievement of carbon reduction targets, energy efficiency, market leadership, regulatory performance, and the adoption of market mechanisms. It also highlights that many countries lack comprehensive legal frameworks for climate change, environmental protection, and carbon performance, with existing regulations being predominantly voluntary.