Joining multi-stakeholder initiatives to fight climate change: The environmental impact of corporate participation in the Science Based Targets initiative

This study theorizes and empirically tests whether firms' decisions to join multi-stakeholder initiatives, targeting climate mitigation, lead to improved environmental performance. We focus on firms' participations in the Science Based Targets initiative, a multi-stakeholder initiative meant to support firms in setting greenhouse gas (GHG) emission reduction targets in line with the thresholds defined by the Paris Agreement in 2015. The study hypothesizes that participation reduces firm's concerns about uncertainty and encourages investments in timeous internal climate change activities. We used the coarsened exact matching methodology to create a matched sample of European and North American listed firms participating in the initiative and comparable, non-participating firms over a 3-year period from 2015 to 2017. The results showed that firms' participation led to lower levels of GHG emissions compared to similar non-participating counterparts, especially when they committed to the initiative with the intention to follow the proposed indications.