Assessing the effectiveness of interdependent corporate sustainability choices

Lowering the environmental externalities of business operations while preserving firms’ value is a challenging task that involves complex sustainability decisions. These decisions require navigating highly interconnected choices of actions and goals that characterise companies’ sustainability behavi...

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Bibliographic Details
Published inClimate Action Vol. 4; no. 1; pp. 25 - 11
Main Authors Cenci, Simone, Burato, Matteo, Rei, Marek, Zollo, Maurizio
Format Journal Article
LanguageEnglish
Published London Nature Publishing Group UK 06.03.2025
Springer Nature B.V
Nature Portfolio
Subjects
704/844/685
706/703/66
Behavior
Capital expenditures
Climate Change
Climate Change Management and Policy
Decision making
Decisions
Earth and Environmental Science
Effectiveness
Energy
Environment
Environmental Economics
Environmental management
Environmental performance
Environmental Politics
Performance evaluation
Risk reduction
Social Policy
Stockholders
Sustainability
Variables
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ISSN2731-9814
2731-9814
2731-3263
DOI10.1038/s44168-025-00222-9

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Summary:Lowering the environmental externalities of business operations while preserving firms’ value is a challenging task that involves complex sustainability decisions. These decisions require navigating highly interconnected choices of actions and goals that characterise companies’ sustainability behaviour. Here, we develop an empirical framework to investigate the implications of choice interdependence on companies’ integrated financial and environmental performance. Our results suggest that the sustainability choices of companies in energy and energy-intensive sectors emerge from effective decision-making processes and have a larger impact on performance than random allocation of actions. However, comparing the behaviour of companies in our sample with hypothetical quasioptimal (“satisficing”) choices, we observe a considerable under-performance, a low choice differentiation across the population, a significant over-investment in risk mitigation activities, and under-investment in developing innovation capabilities. Overall, our study provides a framework for evaluating companies’ contribution to a sustainable low-carbon transition and highlights critical gaps in corporates’ environmental actions.
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ISSN:2731-9814
2731-9814
2731-3263
DOI:10.1038/s44168-025-00222-9