New generations of workers are increasingly conscious of the harmful consequences of business activities on the environment. Firms that fail to align with environment-related imperatives risk censure and stigmatization from current and future employees. Our study examines how elite corporate law firms’ ability to hire entry-level workers is affected when adding stigmatized (oil and gas) clients to their portfolio. Our findings suggest that taking on stigmatized clients can reduce the ability of firms to hire graduates from leading law schools. Thus, these elite firms are subject to negative demand-side externalities in the rookie labor market. However, firms can offset this negative hiring implication and deflect stigma-by-association by allowing workers to engage in more meaningful work (“stigma cleansing”) and by offering a greater range of services to non-stigmatized clients (“stigma dilution”).

Firms apply substantive and symbolic actions and communication to enhance their legitimacy and reputation in response to the complex institutional environment. Corporate sustainability and its communication have become integral to firms' legitimacy and reputation. When companies design sustainability communication strategies, they constantly seek to uphold a legitimate image by aligning with given societal norms and expectations. Firms do so while simultaneously trying to build a positive reputation based on differentiation. This multiple case study aims to understand how this balancing act can lead to unintentional greenwashing or brownwashing. The results describe three observed interplays of legitimacy and reputation and associated (non)communication risk–greenwashing and brownwashing practices. The findings reveal that building on pragmatic legitimacy contributes to credibility and brings the lowest risk of communication distortion. The study contributes to research on the relationship between reputation and legitimacy and joins the ongoing debate about the dynamics of greenwashing and brownwashing. By so doing, the paper adds to the critical scholarly discussion on sustainability. Practically, the study seeks to help companies avoid over- or under-communication of their sustainability achievement and encourages them to develop stakeholders' knowledge and influence legitimate practices actively.

We build an analytical model of greenwashing and derive a firm's decisions to improve its social and environmental impacts (SEI) as well as communicate about them to the public. We analyze the impact of external pressure on the firm, its supply chain visibility, and lack of public trust in such communications on the firm's decisions, and on the incidence and magnitude of greenwashing. We uncover several interesting insights which are relevant for firms and external entities like regulatory authorities and sustainability activists. We also derive a parameter that we call the 'mistrust risk' and demonstrate its importance for firms to decide an appropriate strategy for communicating their SEI to the public. A key finding of our paper is that greenwashing cannot be reduced just by increasing external pressure on firms. We also find that firms should be allowed to showcase any verifiable initiatives that they undertake for improving their SEI. Both these findings defy common intuition and practice. Furthermore, we make a strong case for external entities to try to understand firms' intent to greenwash rather than just penalizing them for greenwashing.

While corporate civil liability for damages is not a novel concept in national law, it is not yet clear how it relates to the corporate human rights due diligence duty in the recent EU Corporate Sustainability Due Diligence Directive (CSDDD). To contribute to filling this gap, this article discusses the human rights due diligence duty under the scope of civil law duties in continental and common law jurisdictions. Consequently, it examines the impact of the EU human rights due diligence duty on the parent-subsidiary corporation relationship and the responsibility of the former for the torts of the latter. Arguing for a stricter liability regime between the parent and the subsidiary, the article concludes by discussing the effects of the EU Directive on the company law concept of separate personality.

This study investigates whether part-time employees improve firm-level ESG (i.e., environmental, social, and governance) performance. Combining complementary views from role and issue-selling theory, we theorize that the temporal structure of part-time arrangements may be driven by a part-time employee’s prosocial motives, which include a greater emphasis on non-work responsibilities (e.g., caregiving and responsibility for others). Moreover, this identity linked to prosociality might induce a corresponding issue-selling behavior at the workplace since part-time employees might push for more responsible conduct from their employer. We develop and test this theoretical prediction using a three-studies design. Study 1 finds that part-time employees are more prosocially inclined than their peers, as evidenced by higher social value orientation scale values. Study 2 applies BERT topic modeling to a large sample of Glassdoor employee reviews and reveals that part-time employees address ESG issues more frequently in their reviews than their full-time counterparts. Study 3 provides macro-level evidence that firms with more part-time employees exhibit better ESG performance. We mitigate endogeneity concerns using the coefficient stability test by Oster (2019), the staggered adoption of the Affordable Care Act, and occupation-specific effects of part time employees.

A growing literature considers the role of workers’ personal politics in driving organizational outcomes. Prior work has measured the distribution of workers’ personal politics within employers using political donations. In this paper, we introduce an alternative measure, VRscores, which we construct by linking US voter registrations with online worker profiles. We show that VRscores capture a significantly larger and more representative population of employees and employers. VRscores and donations-based measures are only moderately correlated and differ in their classification of the political lean of a given workplaces for nearly one in four public companies. We describe various applications of VRscores for strategy and management scholars as well as social scientists more broadly.

Brands are important in transitioning consumer habits and, consequently, making our society a more sustainable one. Sustainability has become an important consideration when consumers and other stakeholders award their votes (e.g., through consumption and employment) to brands. However, brands may experience difficulties when implementing new features, such as sustainability, into their brand image. Brand incongruence can emerge when new information deviates from consumers' expectations. How sustainability may lead to such incongruence is the focus of this study, which investigates the potential (in)congruence of sustainability for brands based on the concept of brand personality. The results of the quantitative survey (n=11,110) illustrate that all five brand personalities (sincerity, excitement, competence, sophistication, and ruggedness) have the potential to embed sustainability into their brand image. The findings of this study lay the groundwork for further research on the critical issue of sustainability and branding and may encourage brand leaders to embed sustainability into brand strategies without fear of brand incongruence.

Despite the widespread belief that inclusion in prominent rankings benefits firms, emerging research suggests that marginal inclusion may at times have unintended negative consequences. Replicating and extending Lewis and Carlos (2023), who document negative effects for firms barely included in the 100 Best Corporate Citizens list, we examine how marginal inclusion in the Fortune 500 ranking influences evaluations by key stakeholders. Through a quasi-replication of the Lewis and Carlos (2023) study, we find supporting evidence that firms ranked near the bottom of the list experienced negative external evaluations, not only from investors but also from industry peers. We develop a theoretical explanation for these effects, emphasizing changes in evaluators’ comparison sets and the conflation of ranking criteria with overall quality. Our study also contributes to research on corporate social responsibility (CSR) by showing how recognition in rankings may shape stakeholder perceptions of firms’ social and financial performance.

The voluntary carbon market has emerged as a promising mechanism for organizations to offset emissions through purchasing carbon credits from dedicated emission reduction projects. However, media investigations have exposed pervasive quality issues with certain carbon credit projects. While negative media scrutiny has contributed to stark decline in demand for carbon credits, the effect on carbon credit supply remains less understood. This paper examines how media scrutiny on specific carbon credit projects in the forestry sector, verified by Verra – the largest carbon credit registry – spilled over to the supply decisions of other carbon credit projects. We conceptualize carbon credit projects’ decisions to increase or decrease carbon credit supply as navigating the tension between stigmatization and competition-induced substitution effects. Using a ten-year panel dataset of over 10,000 carbon credit projects, we investigate spillover effects across two categories: the registry and the sector. We find that Verra-verified forestry projects reduced supply, while forestry projects in other registries increased supply. Non-forestry projects, even those verified by Verra, were largely unaffected. This study contributes to the literature on voluntary carbon markets and spillover effects by highlighting the heterogeneous supply-side responses to public scrutiny.

This study examines how organizations respond to conflicting evaluations from multiple intermediaries. While prior research suggests that conflicting assessments might dilute the influence of any single system, we argue they can intensify reactivity by creating reputational dissonance—uncertainty stemming from inconsistent evaluations. Organizations facing such dissonance are more likely to act to reduce discrepancies, driven by concerns about stakeholder confidence in their positive reputation. This effect is stronger for organizations (a) dependent on intermediary audiences for key resources and (b) when peers receive consistently positive ratings, increasing reputational contrast. Our empirical setting focuses on ESG ratings, examining the early interaction between KLD and Innovest. Results show that firms with favorable prior KLD ratings reduce toxic emissions more significantly in response to unfavorable Innovest ratings. This effect is amplified for firms dependent on financial investors, Innovest’s key audience, and when peers receive favorable Innovest ratings. These findings contribute to the literature on reactivity, highlight how new intermediaries gain traction by challenging established reputations, and raise concerns about the proliferation of ESG ratings diluting their collective influence.

This study investigates the impact of public pressure and information disclosure on the adoption of environmentally friendly technologies, specifically focusing on the use of chemicals in hydraulic fracturing (fracking) in the US. Utilizing a dataset that includes both publicly traded and privately held firms, we explore how these entities respond differently to regulatory pressures and public scrutiny, particularly in the context of the use of toxic chemicals. Our analysis reveals that public firms, which are subject to greater external scrutiny from shareholders and the public, are more likely to reduce their reliance on toxic chemicals and trade secret claims when faced with increased public pressure. In contrast, private firms tend to increase trade secret claims, potentially as a strategy to conceal toxic chemicals, especially under heightened regulatory risks. The study further examines the effects of the 2016 U.S. presidential election as an exogenous shock, highlighting a shift in private firms’ behavior in response to perceived regulatory leniency under the Trump administration. Our findings underscore the complex interplay between public pressure, regulatory environments, and firm heterogeneity in shaping corporate environmental strategies, with implications for policy design and the effectiveness of information disclosure as a tool for directed technical change.

We conducted a study of the environmental movement, from its conservation beginnings in 1892 to present-day, to explain how marketization impacts social movements’ interactions across issues. Analyzing data from historical and contemporary archives, we use both qualitative and quantitative methods to reveal marketization as a key differentiator between the relatively more market-driven environmental movement and the environmental justice movement rooted in social justice. Resource imbalances between marketized and community-based movements trigger social categorization processes, delimitating organizational identity boundaries that become first-order interpretive frames shaping cross-issue engagement. Rather than collaborating in a broader social movement exchange field, organizations engage in interstitial negotiations from within the bounds of the marketized movements’ identities. In doing so, a third tangential field emerges because the dominant field defines it with a constitutive rule grounded in identity. This research contributes research on social movement theory by unveiling how marketization is reliant on and fueled by organizational identity, and how it can subsequently obfuscate the intentions and goals of even the most well-intended actors. It also contributes to research on institutional field emergence, by reconceptualizing interstitial negotiations through a lens of power

Prior work analyzing social movements’ target selection has emphasized firm characteristics, such as status, reputation, and social responsibility, that enhance attention to the activists’ cause. However, the production of targets by a movement is not a one-shot game. We posit that after an initial attack, the visibility of the activist and the resonance of their frames drive further mobilization. By casting a firm in resonant storylines, a visible activist shines a vilifying spotlight that others follow. We test our theory in the context of the ESG countermovement. We combine scraped media-based data on activist targeting of firms between 2019 and 2023 with data on firm characteristics, activist visibility, and trending topics in traditional and social media. We observe that, rather than being a “bottom-up” movement led by grassroots efforts, the ESG countermovement is predominantly driven by political elites. While firm characteristics drive the initial selection of targets, subsequent targeting is driven by the visibility of the initial activist and whether they linked the target and its ESG practices to resonant societal frames with negative sentiment. Our work offers a more complete model of target production by emphasizing activist visibility and frame resonance, explaining the persistence of activism against corporate targets.

Companies in various industries are under growing pressure to assess the costs of decarbonizing their operations. This paper develops a generic abatement cost concept to identify the cost-efficient combination of technological and operational changes firms would need to implement to drastically reduce greenhouse gas emissions from current production processes. The abatement cost curves resulting from our framework further serve as a decision tool for managers to determine the optimal abatement levels in the presence of environmental regulations, such as carbon pricing. We calibrate our model in the context of European cement producers that must obtain emission permits under the European Emission Trading System (EU ETS). We find that a price of €85 per ton of carbon dioxide (CO2), as observed on average in 2023 under the EU ETS, incentivizes firms to reduce their annual direct emissions by about one-third relative to the status quo. Yet, this willingness to abate emissions increases sharply if carbon prices were to rise above the €100 per ton of CO2 benchmark.

Sustainable finance is criticized for its limited capacity to deliver systemic societal impact. Existing research has primarily focused on interactions between investors and companies, neglecting investment firms' internal governance and organizational characteristics. This paper examines how investment organizations can be structured to achieve financial and societal goals systematically by studying the upstream interactions between asset managers and asset owners. We build on a longitudinal case study of a private equity impact fund focused on environmental transitions approached through ethnography, interviews, and archival data. Our findings highlight the critical role of the fund's organizational architecture—encompassing value-creation objectives, operational resources, and governance mechanisms—which is determined before its active life on the market. This architecture shapes the behavior of the asset manager throughout the fund’s lifecycle. We also show how hybridizing the organizational architecture by integrating elements from financial and environmental logics can foster subsequent investment and monitoring practices geared toward systemic impact, by driving alignment between financial and environmental. By uncovering the upstream organizational mechanisms determining investors' behavior in the financial markets, this research contributes to the literature on sustainable finance and corporate governance and calls for increased transparency and disclosure of the key characteristics of investment organizations' architecture.

Climate change is a pressing grand challenge, but it remains unclear whether institutional investors can use normative forces to direct firms toward decarbonization. Using the institutional logics perspective to study the impact of Pope Francis’s environmental encyclical in 2015, we theorize and find that the normative legitimacy of environmental logic, as induced by religious logic, allow Christian investment funds to go beyond instrumental calculations and engage portfolio firms in reducing carbon emissions. We analyze firms from 27 countries in the surrounding window of 2012 to 2019 with a difference-in-differences design and find that firms with Christian fund ownership reduce their carbon emissions 1.09 million tons more than those without such ownership. This effect is more pronounced when the Christian funds are more committed to Christian religious logic. This effect is also stronger when the firms’ decarbonization practices are oriented toward environmental logic as an end rather than a means, as demonstrated by offering sustainability incentives to executives, and weaker when firms’ existing decarbonization practices are oriented toward environmental logic as a means rather than an end, as evidenced by carbon emissions trading. Our study contributes to research on institutional complexity and decarbonization.

To fill knowledge gaps on alignment versus decoupling between public actions and private lobbying behavior, we provide some of the first evidence on of this phenomenon in the context of corporate lobbying positions on climate policy, using voluntarily-disclosed lobbying positions of over 3,000 corporations on climate policies in 125 countries during 2010-2023. We examine which firms are more likely to disclose their lobbying activity; to engage in a greater amount of lobbying activity; to support climate policy; and the relationship between CSR and support for climate policy. We find that larger emitters, firms with more decarbonization initiatives, and firms located in countries with greater disclosure pressure are more likely to disclose. We find a U-shaped relationship between emissions and lobbying frequency, and a monotonic relationship between emissions and number of lobbying mechanisms used. Firms are more likely to support climate policy if they have lower GHG emissions and implement more decarbonization efforts, suggesting that decoupling is not the norm. Firms in extractive industries such as mining, oil and electric utilities are the most engaged in opposing climate policy. We find significant variation in corporate support for climate policy depending upon the nature of particular policy types.

This research investigates how indigenous knowledge, and practices offer crucial insights into reshaping supply chains and advancing toward a sustainable, post-growth era. In framing the existing literature on supply chains and indigenous knowledge around the Brazil nut production system, we aim to explore the following questions: How can supply chains be reimagined to support sustainable practices and equitable governance in a post-growth era? How do indigenous knowledge systems shape regenerative supply chain models for a post-growth future? By adopting an ethnographic approach methodology, the study draws on immersive fieldwork in the Amazon rainforest, including interviews, participatory workshops, and documentary analysis, to examine three layers of "encapsulation": the forest relationship, cooperative structure, and market contracts. These layers reveal the interplay between governance systems, indigenous ways of organising, and external market dynamics applied to the Brazil nut supply chain. The Paiter Suruí cooperative exemplifies a governance model that balances ecological preservation with market participation. The study contributes to supply chain literature by introducing the concept of "polyrhythmic governance," emphasising the integration of diverse knowledge systems. It underscores the need for equitable frameworks that respect indigenous agency, offering pathways for sustainable and inclusive economic practices in a post-growth era.

Research on organizational responses to stakeholder pressure often assumes organizations choose either symbolic or substantive responses. This study challenges this either-or perspective by exploring the sequential nature of responses. Organizations may first adopt visible policies to acknowledge stakeholder issues and later implement them, suggesting responses can unfold in phases over time. Sequential responses—and the time between adoption and implementation—stem from challenges organizations face when implementing policies. Drawing on the literature on policy implementation and the resource-based view of the firm, we develop a theoretical framework around the capabilities and constraints influencing the timely implementation of adopted policies. Using 13 years of data on U.S. firms’ responses to stakeholder pressure around consumer health and safety, we find that structural implementation capacities increase the likelihood of timely policy implementation, while attentional constraints reduce it. Our findings extend research on decoupling and organizational responsiveness by reconsidering what are often labeled as symbolic responses. We highlight the phased nature of responses and introduce new mechanisms driving substantive organizational action. This work provides a nuanced perspective on organizational behavior, emphasizing the importance of implementation challenges and capacities in bridging the gap between policy adoption and meaningful action.

Do firms take more action to mitigate their impact on climate change when facing heightened climate risks? This study examines the relationship between climate risks—encompassing both physical and transition risks—and corporate climate change mitigation strategies. Using data on forecasted climate risks, climate targets, and greenhouse gas emissions of U.S. public companies, we find that firms exposed to greater physical and transition climate risks are less likely make substantial mitigation efforts. We further explore the underlying mechanisms. Firms exposed to greater physical climate risks are more inclined to pursue adaptation strategies, which may divert resources away from mitigation. Meanwhile, firms facing higher transition climate risks are more likely to adopt anti-climate political strategies rather than make mitigation efforts. These firms also show a greater tendency toward low-carbon innovation.

This paper provides the first rigorous assessment of the financial sectors’ resilience to biodiversity transition risk. We provide “bottom-up” stress tests using comprehensive

euro-area credit registry data and a market-based “top-down” stress test based on

banks’ stock return sensitivities to biodiversity risk. Industries exposed to biodiver-

sity transition risk account for approximately 15% of total bank credit to non-financial

firms, compared to about 25% for climate-exposed industries. Stress test scenarios

indicate that even under severe conditions, additional losses in biodiversity-exposed

industries would constitute only 0.3 to 0.5% of the financial system’s corporate loan

portfolio. A top-down market-based approach yields similar results with capital short-

falls following a biodiversity shock peaking at 0.5% of banks’ market capitalization.

These results suggest that biodiversity transition risks currently pose only a moderate

threat to financial stability

We study how holdings by investors who consider environmental, social, and governance (ESG) issues when formulating investment decisions affect market efficiency. We find that a higher level of socially responsible institutional ownership (SRIO) results in a lower level of stock price informativeness, measured by the future earnings response coefficient. Using an exogenous shock to SRIO, we show that this relationship is causal. Due to their ESG preferences, socially responsible institutions (SRIs) place less weight on earnings information and thus hinder the incorporation of future earnings information into stock prices. In contrast, they place more weight on ESG information. Correspondingly, the market reaction to earnings news weakens as SRI holdings increase, and vice versa for ESG news. We rule out various alternative explanations such as 1) SRIs are less skilled than their counterpart institutions in processing financial information, 2) firms provide less financial information in response to increased SRIO, or 3) firms’ general information environment is changed due to change in ownership composition. Overall, our findings suggest that ESG information increases investors’ information processing costs and hampers stock market efficiency in incorporating future earnings information.

Environmental, social, and governance (ESG) rating ambiguity, defined as the divergence of ESG ratings across different agencies, is often considered a problem for ESG investors, because extant research assumes that investors use ratings for evaluation purposes and rating ambiguity makes stocks hard to evaluate. We extend this literature by theorizing how ESG investors can take advantage of ESG rating ambiguity to rationalize controversial investment decisions so that these decisions can appear simultaneously congruent with incompatible institutional demands from the financial logic and the social logic inherent in ESG investing. We analyze a panel dataset comprising 7,248 firms across 67 countries between 2006 and 2021, focusing on green stocks and sin stocks that exemplify incompatible institutional demands. We find that ESG rating ambiguity increases ESG ownership in sin stocks and decreases ESG ownership in green stocks. Our findings remain, using a difference-in-differences analysis based on a regulatory shock, addressing the alternative explanation (i.e., investors use financial returns as a non-ambiguous criterion) and using different measures and rating coverage.

Corporate campaign contributions can enhance firm performance by securing lobbying access to recipient politicians but may also incidentally advance controversial sociopolitical causes peripheral to firm performance that these politicians champion. This paper examines how employees shape firms’ decisions to navigate the trade-off between advancing regulatory interests and mitigating the unintended social impact of corporate campaign contributions. Using the context of the January 6, 2021, U.S. Capitol Insurrection, we analyze how employees’ political leanings influenced U.S. public companies’ decisions to halt campaign contributions to Members of Congress who objected to certifying the 2020 presidential election results (“Objectors”). Firms with employees who supported pro-certification legislators significantly reduced contributions to Objectors following the Insurrection. These reductions constrained firms’ ability to lobby Objectors, even when the latter wield outsized power over firms’ regulatory interests, and were particularly pronounced when employees could easily monitor corporate political spending.

Extant research has overlooked why companies receive varying levels of criticism for not engaging with polarized social issues. Further, little is known about the consequences of engaging with these issues in the face of criticism. To understand which firms are at the highest risk of missteps, we integrate insight from expectations management and identity theory. We argue that external criticism stems from general audiences’ expectations being left unmet. These expectations have two dimensions: predictive, reflecting audiences’ perceptions of the likelihood a firm will engage based on past actions and related cues; and prescriptive, based on their beliefs as to whether a firm has a moral obligation to respond. We further posit that responding to a polarized issue in the face of criticism can backfire, eliciting greater and increasingly bipartisan critique. An empirical analysis of criticism for silence and subsequent corporate responses to a controversial voting law in Georgia supports these arguments. In this context, prescriptive and predictive expectations interacted to lead to mostly Democratic-leaning critique. Firms that subsequently broke their silence received both Democratic- and Republican-leaning criticism afterwards. Post-hoc analyses revealed that early (prior to a buildup of critique) and substantive (vs. symbolic) engagement was associated with less criticism.

A growing body of research considers how consumers react when companies become aligned with a stance on a polarized sociopolitical issue. Prior studies of individual responses have examined customer reactions to specific companies supporting a particular side of a given issue. However, no study has examined whether the resulting reactions may differ depending upon the side the company supports. This may limit the generalizability of these findings, especially because sociopolitical alignment tends to be disproportionately carried out by a small number of companies and predominantly in support of left-wing positions on a small number of issues. We thus provide the first evidence on how customers react to corporate alignment on different sides of the same issue. We do this with two experiments involving well-known real-world companies (Bud Light and McDonald’s) which simultaneously were aligned with different stances on two controversial issues (transgender rights and Israel-Palestine). We find asymmetrically negative effects of sociopolitical alignment on customers: consumers react negatively when a company supports the opposing side but do not react positively when it supports the side they prefer. While the direction of consumer reactions are asymmetrically negative, this effect is symmetric across opposing stances on the same issue.