Faculty of Business, The Hong Kong Polytechnic U., Hong Kong
Firms are under government and consumer pressure to set up corporate carbon neutrality goals. Some firms are setting ambitious goals to demonstrate their strong commitment to addressing climate change. Attaining these ambitious goals requires tremendous effort to neutralize a significant number of current emissions within a short period of time. However, the literature on operations management provides limited understanding of the immediate impacts of corporate carbon neutrality goal setting. Based on an event study of U.S.-listed manufacturing firms, this paper finds that corporate carbon neutrality goal setting can trigger shareholder concerns and reduce firm value. This negative effect is more salient when the goal is ambitious; however, the tension between ambitious carbon neutrality goal setting and shareholder concern was mitigated when the firms had better operating efficiency, flexibility regarding carbon neutrality, and greater momentum in reducing emissions. This study contributes to the sustainable operations literature and provides insights for theory, management, and policy.
