Greening Criminal Records: How Environmental Programs Mitigate Corporate Scandals

• In Event: Poster Session: STEP 2 & New Perspectives within Political Psychology
  In Poster Session: Poster Session: STEP 2

Abstract

Greenhouse gas emissions produced by multinational companies (MNCs) are an important determinant of climate change. Political actors and the public increasingly expect MNCs to adopt programs that will reduce such emissions. Causes of companies' voluntary commitments to green initiatives, however, still remain unclear. Through emission reduction programs, firms pledge to costly undertakes whose returns are often uncertain. Although research has started to delve into environmental determinants of voluntary green commitments, we shed light on an overlooked non-environmental cause: corporate criminal scandals. When a company is involved in financial fraud, its public image is undermined. We argue that the firm responds to such negative events by adopting social responsibility programs that yield quick reputational benefits: green initiatives. Crucially, this also holds for non-environmental criminal conduct; green commitments are a strategy aimed at cleansing the criminal record of a company in the eyes of the public. We provide evidence for our argument by collecting data on public companies' voluntary emission targets, whether such commitments are science-based, and whether any environmental personnel is appointed in the executive board to oversee their implementation. Our research design leverages unexpected news about financial fraud scandals in order to remove endogeneity between voluntary emission targets and criminal misconduct. Results provide important implications for global governance studies. We show that public response to negative events can trigger companies into pro-social behaviours even across unrelated areas of corporate social responsibility.

Authors

• Lorenzo Crippa, University of Strathclyde

• Dafni Kalatzi Pantera, University of Birmingham