Climate Harm, Managerial Capability, and the Corporate Environmental Action Gap: Evidence From 24 Economies

ABSTRACT Why do some firms that experience climate‐related damage also take environmental action while others do not? Using the World Bank's B‐READY enterprise surveys, covering 36,401 firms across 24 economies surveyed with a harmonized instrument, this study estimates linear probability models with country and sector fixed effects, drawing on the capabilities view of the firm and the institution‐based view of strategy. Experienced climate harm is associated with energy‐management measures but not with CO 2 monitoring, and the association is observable only among smaller establishments, although the size contrast is not itself statistically significant. Managerial capability is robustly associated with both practices within countries, and does not reliably moderate the harm–action relationship. Capability and institutions operate at different levels: capability distinguishes acting from inactive firms within countries, whereas the cross‐country gap aligns more closely with institutional and developmental conditions than with average capability stock. The action gap is therefore more closely associated with organizational capability and institutional context than with risk exposure alone. All estimates are associational.