Disentangling the role of stakeholder pressure on carbon management strategy adoption

Purpose Based on institutional, stakeholder and legitimacy theory, this research aims to disentangle the role of stakeholder pressure on carbon management strategy adoption. Design/methodology/approach This study considers the Bombay Stock Exchange top 500 listed Indian firms for seven years, i.e. from FY 2016–17 to FY 2022–23. The panel data regression model has explored the association between stakeholder pressure and carbon management strategy adoption along with certain control variables. Findings The empirical findings indicate that regulatory, institutional and industrial pressure exerts a significant and positive impact on the propensity to adopt a carbon management strategy, while shareholders and creditors fail to pressure firms to adopt a carbon management strategy. Practical implications This study provides treasured acumens to the existing literature on climate change, carbon emission disclosure, carbon management strategy and stakeholder pressure. Social implications The findings claim that the adoption of a carbon management strategy is influenced by regulatory, institutional and industrial pressure, implying that a firm’s adoption of a carbon management strategy involves not only managing regulatory pressure but also considering the perceived pressures from nonregulatory stakeholders such as institutional investors and creditors. This study offers valuable insights to corporate managers and policymakers by concluding that stakeholders play an imperative role in shaping the carbon management strategies of firms. Originality/value To the best of the authors’ knowledge, this current research is first to unravel the stakeholder pressure on the adoption of carbon management strategy.