What Determines the Corporate Response Level to Climate Change?

초록

The purpose of this study is to examine various corporate characteristics that influence the corporate response level to climate change. We classified corporate characteristics into financial structure, governance structure and stakeholder pressure, and disclosure of climate change information and related environmental risks, and analyzed each characteristic’s impact on corporate reactions to climate change. The sample included 250 Korean companies that participated in the CDP survey and agreed to the survey information disclosure between 2011 and 2013. The empirical analysis results suggest a greater level of corporate response to climate change from companies that are larger in size and have lower leverage ratio and greater growth potential. In terms of governance structure and stakeholder pressure, the presence of board members making environmental decisions, high minority shareholder ratio, and low greenhouse gas emission per revenue have resulted in higher response levels to climate change. Additionally, companies that voluntarily published sustainability reports show a higher response level to climate change. The result indicates that sizable companies with financial stability and higher growth potential, acknowledged by the capital market, are more active in responding to climate change. Moreover, management attitude has a direct relationship with corporate response level to climate change. Diversified ownership among various stakeholders acts as pressure on making environmental decisions, and companies whose activities are more exposed to outside stakeholders are involved in more activities to satisfy stakeholder expectations. Finally, external stakeholders regard emission per revenue, that is, carbon intensity, not the absolute amount of emission, as corporate risk, and thus, companies actively engage in resolving the risks related to carbon intensity.

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