Investing Green to Become More Green: An Analysis of Whether S&P 100 Companies are Decreasing their Carbon Footprint Proportional to their Liquidity
Date of Award
Bachelor of Arts (A.B.)
Global warming may have ignited the flame in corporations to invest in the changing business and environmental climate. The importance of a broader stakeholder value perspective has grown as firms have impacted the global environment. The S&P 100 firms are at the forefront of the public’s attention in maximizing shareholder and stakeholder value. With the worldwide expectation for corporate social responsibility, these top firms are not in question of whether they are investing in sustainability initiatives but to what extent. We seek to decipher if these top corporations are reducing their carbon footprint proportional to their excess available funds. Since 2016, total GHG emissions induced by S&P 100 firms have steadily decreased; however, a potential collective attitude of “doing enough” to appease investors and the public eye could generate a plateau in GHG emission reduction amongst these top firms. Our research study leverages a fixed effect regression analysis to determine the relationship between business liquidity and GHG emission reduction to ultimately unveil whether social impact is proportional to financial means. In our regression analysis, liquidity measures and ratios yield statistically significant results, demonstrating the alignment between the bottom line and triple bottom line (environmental, social and governance, ESG, investments). The presence of a public ESG auditor and early adopters of sustainability reporting also are statistically significant, with a surprising finding that early adopters of sustainability reports have higher annual GHG emissions. The assurance from public auditors is associated with lower GHG emissions; with only 11 S&P 100 companies having a public auditor and the SEC instituting new regulations, there is optimism in the continued reduction of corporate-induced emissions. Our exploratory analysis delves deeper into the unquantifiable contributors of emission outputs, investigating industry-specific trends, marketing materials, and sustainability reports.
Hendler, Ashley and Hunter, Ethan, "Investing Green to Become More Green: An Analysis of Whether S&P 100 Companies are Decreasing their Carbon Footprint Proportional to their Liquidity" (2022). Senior Honors Papers / Undergraduate Theses. 44.