Carbon emissions and litigation risk

This research investigates the impact of litigation risk on corporate carbon emissions. The findings indicate that companies facing litigation tend to decrease their carbon emissions, specifically Scope 1 emissions, as a strategy to mitigate potential litigation risks. Our analyses do reveal no significant association between litigation risk and indirect emissions from purchased energy or those arising from a company's value chain. Findings further reveal that when companies encounter new litigation risks, they tend to increase the external verification of their carbon emissions. This paper offers important implications for stakeholders and investors seeking to promote sustainability when companies encounter litigation risk.