Measuring Carbon Emission Efficiency in a Developing Country: A Comparative Study of Sustainability Initiatives and Nonsustainability Initiatives of Manufacturing Firms

ABSTRACT Improving carbon emission efficiency (CEE) is considered one of the most cost‐effective ways to enhance sustainability and address climate change mitigation in developing countries like India. This study analyzes manufacturing firms' CEE of sustainability initiatives (SI) and nonsustainability initiatives (non‐SI) and examines the effect of nationally determined contributions commitments on these firms. A nonradial slack‐based model is adopted to assess efficiency over the period 2012–2022. Furthermore, the Tobit model is used to evaluate the influencing factors that promote the CEE of manufacturing firms. Findings reveal that most manufacturing firms in India, both in the SI and non‐SI groups, are carbon inefficient due to pure carbon emission inefficiency. Results also indicate that workforce skills training (0.23%) and technological progress (0.14%) positively impact the CEE of manufacturing firms. In addition, SI firms support the Porter hypothesis, suggesting that strict emissions regulations improve efficiency and encourage innovation. Therefore, policymakers in developing countries should implement performance‐based policies through trading programs and focus on skilled labor training and technological advancements to address climate change mitigation better and promote sustainability.