Organization capital and GHG emissions

This study examines the impact of organization capital on greenhouse gas (GHG) emissions. Utilizing a sample of 3817 firm-year observations of US publicly listed companies over the period from 2002 to 2019, we find that firms with higher organization capital are associated with lower GHG emissions. Our cross-sectional analysis reveals a stronger negative relationship between organizational capital and GHG emissions among firms characterized by better corporate governance and lower financing constraints. Moreover, this negative relationship is more evident for firms operating in carbon sensitive industries and regions that have implemented an emissions trading scheme (ETS). This result survives after applying a range of robustness tests and addressing endogeneity concerns. Further, we disaggregate total GHG emissions into direct and indirect emissions and find that high-organization capital firms tend to reduce both direct and indirect emissions. Taken together, our analysis suggests that organization capital has considerable implications for corporate GHG emissions.