The green side of corporate culture

Exploiting a unique measure of organizational culture, we examine whether and how a firm's culture affects its carbon footprint. Our results from a large sample of carbon-emitting firms operating in the U.S. indicate that a strong corporate culture reduces firms' Greenhouse Gas (GHG) emissions. This effect of corporate culture is economically sizeable and remains robust to endogeneity and sample selection bias concerns, and to the use of alternative proxies of corporate culture and alternative carbon emission measures. Furthermore, we demonstrate that the effect of corporate culture on emissions operates through both financial and ethical channels. These findings underscore the importance of organizational culture as a strategic lever for enhancing corporate environmental performance and offer novel insights for policymakers, investors, and stakeholders advocating for sustainable corporate practices.