Conference Agenda

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.