Pay for Environmental Performance: The Effect of Incentive Provision on Carbon Emissions

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Pay for Environmental Performance: The Effect of Incentive Provision on Carbon Emissions

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dc.contributor.author Eccles, Robert G
dc.contributor.author Ioannou, Ioannis
dc.contributor.author Li, Shelley Xin
dc.contributor.author Serafeim, Georgios
dc.date.accessioned 2012-12-07T20:15:54Z
dc.date.issued 2012-12-07
dc.identifier.citation Eccles, Robert G., Ioannis Ioannou, Shelley Xin Li, and George Serafeim. "Pay for Environmental Performance: The Effect of Incentive Provision on Carbon Emissions." Harvard Business School Working Paper, No. 13–043, November 2012. en_US
dc.identifier.uri http://nrs.harvard.edu/urn-3:HUL.InstRepos:10018989
dc.description.abstract Corporations are increasingly under pressure to improve their environmental performance and to account for potential risks and opportunities associated with climate change. In this paper, we examine the effectiveness of monetary and nonmonetary incentives provided by companies to their employees in order to reduce carbon emissions. Specifically, we find evidence that the use of monetary incentives is associated with higher carbon emissions. This result holds both in cross-sectional and time-series analysis. Moreover, we find that the use of nonmonetary incentives is associated with lower carbon emissions. Consistent with monetary incentives crowding out motivation for pro-social behavior, we find that the effect of monetary incentives on carbon emissions is mitigated when these incentives are provided to employees with formally assigned responsibility for environmental performance. Furthermore, by employing a two-stage multinomial logistic model, we provide insights into factors affecting companies’ decisions on incentive provision, as well as showing that the impact of monetary incentives on carbon emissions remains significant even when we control for potential selection bias in our sample. en_US
dc.language.iso en_US en_US
dash.license OAP
dc.title Pay for Environmental Performance: The Effect of Incentive Provision on Carbon Emissions en_US
dc.type Research Paper or Report en_US
dc.description.version Author's Original en_US
dc.relation.journal Harvard Business School working paper # 13-043 en_US
dash.depositing.author Serafeim, Georgios
dc.date.available 2012-12-07T20:15:54Z

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