Reducing greenhouse gas (GHG) emissions has become a key societal expectation, and governments have incentivized this by introducing carbon pricing, i.e., carbon taxes and emission trading schemes, but their impact on multinationals’ actions is unclear. Building on institutional economics, we propose that the implementation of carbon pricing policies in the home country of multinationals results in a reduction of corporate-level GHG emissions because of the constraining effect of the regulations. We add depth to this idea by proposing spillover effect of these regulatory constraints by arguing that the same policies also reduce GHG emissions in companies that are not targeted by the policies and in the multinationals’ overseas operations that are outside the reach of the policies because of the creation of awareness over the regulatory constraints in other firms and locations. We test these ideas on public companies headquartered in 112 countries and find that corporate GHG emission intensities decrease after their headquarter countries adopt carbon pricing, this effect is only significant on targeted sectors, and it results in carbon leakage on GHG emissions of these multinationals’ foreign operations.