Which Corporate Governance Mechanisms Actually Drive Decarbonisation?
Board members with dedicated expertise in decarbonisation and a company’s systematic engagement with stakeholders on climate-related issues are the most effective corporate governance mechanisms for reducing greenhouse gas emissions.
This is the conclusion reached by HSE University researchers Evgeniia Kiseleva and Linara Khadimullina. They analysed data from 81 of the world’s largest publicly listed oil and gas companies covering the period from 2016 to 2022. The findings have been published in the international academic journal Global Business Review.
In recent years, companies have increasingly adopted ESG governance practices—non-financial indicators that demonstrate to investors, customers, and society whether a business is committed to environmental responsibility, social issues, and sound corporate governance. However, it has remained unclear which ESG governance mechanisms genuinely contribute to reducing emissions.
Linara Khadimullina
‘We analysed 567 observations and assessed the impact of various ESG governance mechanisms on greenhouse gas emissions using a fixed-effects econometric model. Our findings show that widely adopted, general ESG practices—such as establishing sustainability committees, linking executive remuneration to ESG metrics, and achieving a high overall corporate governance rating—do not, in themselves, guarantee a reduction in carbon emissions. These mechanisms address too broad a range of objectives, diluting companies’ focus on specific emissions reduction targets,’ said Linara Khadimullina, co-author of the study and Leading Analyst at the Сentre of Digital Technologies for Nature-Based Solutions of the Carbon Measurement Supersites Programme, HSE Faculty of Geography and Geoinformation Technology.
Evgeniia Kiseleva
‘The climate agenda is centred on a single outcome indicator—greenhouse gas emissions—and companies are expected to achieve net zero targets within a tightly constrained timeframe. While the objectives are clearly defined, it is up to individual companies to determine how best to achieve them. Our study is intended to support businesses by systematising and describing the governance mechanisms currently available,’ emphasised Evgeniia Kiseleva, co-author of the study and Associate Professor in the Department of Financial Management at the HSE Graduate School of Business.
The findings offer a fresh perspective on stakeholder-oriented corporate governance theory. The authors argue that addressing climate challenges requires more than a broad, one-size-fits-all approach designed to satisfy a wide range of stakeholders. Greater effectiveness is achieved through developing specialised climate-related expertise within companies and engaging stakeholders specifically on decarbonisation issues.
The study supports a shift towards more specialised climate governance mechanisms that enable companies to concentrate their resources on achieving measurable reductions in greenhouse gas emissions.
