Commitment level: impact on climate change performance and firm value

Purpose This study aims to examine whether firms’ commitment to emission, energy, and water leads to stronger climate change performance and, consequently, higher firm value. Design/methodology/approach Analyzing 73,739 firm-year observations across 48 countries of the world’s 50 largest economies. The empirical design uses country-industry-year fixed effects with firm-clustered and structural equation modeling, supplemented by coarsened exact matching, entropy balancing and two-stage least squares Heckman to address robustness and potential endogeneity. Findings This study shows that corporate commitments to emission, energy and water commitments are positively associated with stronger climate change performance and higher firm value, with climate performance serving as a key mediating channel. Research limitations/implications The study uses commitment level based on environmental targets: emission, energy and water, which may capture stated commitments rather than actual implementation, and may oversimplify complex environmental outcomes. Theoretically, this limitation underscores the need to distinguish between symbolic and substantive actions to better understand how legitimacy signals, organizational identity and stakeholder responses. Practical implications The study suggests that managers may benefit from adopting integrated environmental targets that are transparently monitored and embedded in operations, as credible commitments enhance both operational resilience and investor confidence. Policymakers and regulators can support this process by adopting standardized disclosure frameworks and offering sector-specific incentives that enhance comparability, transparency and accountability across firms. Originality/value This study fills a key gap by examining quantifiable, target-based environmental commitments using secondary data, whereas prior research on commitment levels has predominantly relied on primary survey-based measures.