Change In ESG-Firm Behaviour After Adoption Of SBTi

Abstract

This thesis studies the Science-Based Target initiative (SBTi) and their effect on corporate ESG-behaviour. Using Refinitiv, a universe of 3,141 firms is created including 962 SBTi companies with the remaining companies being all firms with consistent ESG-Score data from 2013-2021. Applying a firm-fixed effect model I examine three separate hypotheses concerning SBTi adoption affecting emission, ESG-Scores and environmental innovation in the years 2013 until 2021. Over all firms I find a gradual decrease in emissions and increase in ESG and Environmental Innovation Scores across most years, possibly due to recent climate awareness and regulation. The SBTi did not have any significant effect on emission no matter if we look at total emissions, scope one or scope two emissions, showing that setting the targets did not influence company action. ESG and Environmental Innovation Scores on the other hand were slightly negatively influenced, which could result from the SBTi’s stricter regulations, time lags or the financial strain approval fees put on firms. Generally, the research suggests taking a closer look at SBTi firms since greenwashing concerns cannot be disproven.