Combating climate change through organisational innovation: an empirical analysis of internal emission trading schemes
Abstract
Purpose
This paper aims to identify under which circumstances company internal emission trading schemes (IETS) are applied and to examine their actual effects on corporate greenhouse-gas (GHG) emissions.
Design/methodology/approach
Using contingency theory, factors are identified that influence corporate decisions to introduce an IETS. To examine the effects of IETSs, emissions data for a sample of large German companies is used for linear regression modelling.
Findings
The paper finds that today, IETSs are mainly applied by companies with high levels of emissions that are subject to external trading schemes. The current use of IETSs seems to be primarily driven by the interest to reduce emissions cost-efficiently. Testing the effects of IETSs reveals that they are able to reduce corporate GHG emissions significantly.
Research limitations/implications
The effects of IETSs are only tested for companies subject to an external emission trading scheme. Furthermore, the analysis does not distinguish between different types of IETSs. Future research should address the issue of whether the reductions observed also hold true for companies not subject to external trading schemes and should formulate recommendations on how IETSs should be designed.
Practical implications
The paper informs practitioners about the potential benefits of IETSs.
Originality/value
For the first time, the effects of IETSs are tested for companies subject to an external emission trading scheme. The analysis suggests that a new academic debate on IETSs is needed as the introduction of external emission trading schemes has not rendered IETSs redundant.
Keywords
Acknowledgements
The author would like to express his gratitude for the very valuable feedback received at the 10th Annual PhD Conference of the EABIS. For their very helpful comments and for conducting the CSB 2010 survey, the author is deeply thankful to his great colleagues Stefan Schaltegger, Sarah Windolph and Dorli Harms. Furthermore, the author is grateful for the financial support by PwC for the “Corporate Sustainability Barometer 2010”, which provided part of the data analysed in this article. Last but not least, the author would like to thank the Carbon Disclosure Project (CDP) for allowing access to the CDP data.
Citation
Hörisch, J. (2013), "Combating climate change through organisational innovation: an empirical analysis of internal emission trading schemes", Corporate Governance, Vol. 13 No. 5, pp. 569-582. https://doi.org/10.1108/CG-06-2013-0077
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited