Name
Sustainability Control Tightness and Corporate Decarbonization
Date & Time
Monday, July 6, 2026, 9:20 AM - 9:45 AM
Description

This study examines whether the tightness of sustainability control systems shapes firms’ environmental outcomes. We construct a measure of Sustainability Control Tightness (SCT) that integrates the intensity of emission-reduction targets, the formalization of sustainability management systems, and the use of ESG-linked executive pay. Using panel data from 2,053 firm-year observations of US listed firms (2003–2024) drawn from LSEG and ExecuComp, we show that a one-standard-deviation increase in SCT is associated with a 17% reduction in carbon intensity relative to the sample mean. The effects are strongest when ESG metrics are embedded in executive incentives and when executives hold substantial inside debt, suggesting that control system tightness and incentive alignment operate as complements rather than substitutes. These results are robust to alternative specifications and endogeneity concerns. Our findings highlight the instrumental role of formal management control systems in translating sustainability commitments into measurable carbon reductions, contributing to the emerging research on corporate decarbonization and sustainability accounting.

Jamshed Iqbal
Keywords
jamshed.j.iqbal@jyu.fi
Theme
CSR
Author 1
Jamshed Iqbal
Author 2
Toni Mättö
Author 3
Mohsin Riaz