Why do companies participate in climate change-related initiatives? Theoretical and empirical analyses of motivations for Japanese companies

The 2015 Paris Agreement accelerated the trend toward international decarbonization. Climate change initiatives, such as Science Based Targets, Renewable Energy 100%, and Task Force on Climate-related Financial Disclosure are rapidly gaining attention as mechanisms that encourage voluntary efforts by companies to limit emissions. However, participation in these initiatives creates a conflict with the pursuit of short-term profits. Understanding the firms' motivation for initiative participation contributes to the realization of sustainable development. This study empirically examines the motivations for large-scale Japanese firms to participate in climate change initiatives. For this purpose, first, we update the conventional model of corporate motivations for taking environmental actions to fit the contemporary context. We then quantify individual firms' motivations based on various data and conduct regression analyses to identify the factors contributing to the firms' participation in the initiatives. The results indicate that firms have competitive and legitimate motives to participate in these initiatives.