Pay for environmental performance
Subtitle: the effect of incentive provision on carbon emissions
By: Robert G. Eccles, Ioannis Ioannou, Shelley Xin Li, George Serafeim
Contributors: Ioannou, Ioannis; Li, Shelley Xin; Serafeim, George; Harvard Business School
Series: Working paper / Harvard Business School -- 13-043; Working paper (Harvard Business School) -- 13-043
Publisher: Harvard Business School
Published: 2012
Place of publication: Boston ]
Language: eng
Number of pages: 37
Description: 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.
Notes: "November 2012" -- Publisher's website.

Includes bibliographical references (pages 23-24).