This study aims to examine whether firms adopting Science-Based Targets (SBTs) exhibit lower levels of corporate greenhouse gas (GHG) emissions and how this relationship is moderated by country-level regulatory governance.
Building on the new stakeholder theory (NST), the study positions SBT adoption as a mechanism that embeds scientific thresholds and multistakeholder engagement into corporate climate commitments. The analysis uses panel data from publicly listed firms in the USA, China, India, Canada, Mexico, Japan and several European nations between 2018 and 2023.
The study finds that SBT-adopting firms are associated with significantly lower levels of GHG emissions. Furthermore, this negative association is substantially stronger in countries with robust regulatory frameworks.
The findings offer important implications for managers by demonstrating that SBTs are an effective mechanism for achieving emissions reductions. For policymakers, the study suggests that strong national regulatory governance enhances the effectiveness of voluntary corporate climate action.
This research contributes to the literature on corporate climate commitments by demonstrating that SBTs, as science-based and stakeholder-driven governance, can effectively translate voluntary commitments into substantive environmental outcomes. It integrates the NST with an analysis of national regulatory contexts to explain the impact of voluntary climate initiatives.
