Carbon emission trading scheme and carbon performance: The role of carbon management system

This study investigates the effects of carbon emission trading schemes (ETSs) on corporate carbon performance, a critical area given the increasing global concern over climate change and the urgent need for effective emissions reduction mechanisms. Using a sample of listed companies in China and employing a difference-in-differences (DID) design, we find that firms participating in a pilot ETS show an improvement in carbon performance. This improvement is primarily attributed to greater low-carbon innovation outputs in the post-ETS period. Further analyses reveal the crucial role that ETSs play in enabling corporate carbon management systems to effectively enhance carbon performance. We also find that resource availability significantly influences the impact of ETSs, and participating firms generally experience economic benefits 3 years post-implementation. Finally, our results suggest that the positive effects of an ETS on carbon performance are replicable in national ETS contexts.