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Decomposition analysis of corporate carbon dioxide and greenhouse gas emissions in Japan: Integrating corporate environmental and financial performances
Author(s) -
Yagi Michiyuki,
Managi Shunsuke
Publication year - 2018
Publication title -
business strategy and the environment
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.123
H-Index - 105
eISSN - 1099-0836
pISSN - 0964-4733
DOI - 10.1002/bse.2206
Subject(s) - greenhouse gas , emission intensity , energy intensity , carbon dioxide , equity (law) , leverage (statistics) , natural resource economics , business , economics , econometrics , chemistry , energy (signal processing) , statistics , mathematics , ion , political science , biology , ecology , organic chemistry , law
Recent empirical studies often support the positive relationship between corporate environmental performance (CEP) in terms of carbon dioxide (CO 2 ) and greenhouse gas (GHG) emissions and corporate financial performance (CFP). However, this depends on the measurements of CEP (the absolute and relative CEP) and CFP (accounting‐based and market‐based CFP). To understand the relationship structurally, based on the literature, this study proposes identity models that integrate CO 2 and GHG emissions and financial factors. The models decompose CO 2 (GHG) emissions into carbon intensity (GHG intensity), energy intensity, the cost‐to‐sales ratio, the total‐assets‐turnover ratio (TATR), leverage, and equity. The model of supply‐chain GHG emissions additionally adopts supply‐chain GHG intensity. As a decomposition method, this study uses the log‐mean Divisia index. As an application example of the CO 2 model, this study targets Japanese manufacturing firms in 16 sectors from fiscal years (FY) 2011 to 2015. Results show that the change in CO 2 emissions as of 2015 (−802.1 kilotonnes [kt]) is decomposed into 2922.5 kt for carbon intensity, −26036.3 kt for energy intensity, −6350.5 kt for the cost‐to‐sales ratio, −8495.6 kt for the TATR, −7912.3 kt for leverage, and 45070.1 kt for equity. Average values of relative contribution ratios are 20.6% for carbon intensity, 19.1% for energy intensity, and the remaining approximately 60% for financial factors. Among the 16 sectors, as of 2015, the change in total CO 2 emission is statistically significantly positive for equity and significantly negative for the TATR and leverage.