Presenter: Fabrizio Ferraro

Professor in the Strategic Management Department and Academic Director of the Institute for Sustainability Leadership

IESE Business School

Presentation:

The Carbon Footprint of Corporate Purpose

Co-authored with Andrea Cavicchini (Católica Lisbon School of Business & Economics)

N.B Please note, just for this seminar, there is a new Zoom link.

ABSTRACT

Corporate purpose is increasingly viewed as a mechanism for aligning business strategy with social and environmental objectives, yet empirical evidence linking purpose to concrete sustainability outcomes remains scarce. We investigate whether employee-perceived corporate purpose predicts firms’ decarbonization trajectories. Drawing on stakeholder theory and research on organizational attention, we conceptualize corporate purpose as a meaning-making mechanism that shapes strategic decision-making in response to societal challenges. We develop a novel firm-level measure of perceived purpose using natural language processing applied to 3.5 million employee reviews of U.S. firms (2008-2019), linked to greenhouse gas emissions data. Panel models with firm- and year-fixed effects, complemented by instrumental-variable analyses, show that firms with stronger employee-perceived purpose experience significantly lower future Scope 1 emissions. A one percent increase in perceived purpose is associated with a 2.6 percent reduction in direct emissions over three years. We find no significant effects for Scope 2 or 3 emissions, consistent with purpose primarily influencing areas under direct managerial control. These findings provide large-scale evidence that internally perceived purpose links to substantive environmental outcomes rather than symbolic commitments alone, highlighting the crucial role of organizational factors in decarbonization.