Climate policy uncertainty, corporate social responsibility and corporate investments of the energy firms

Abstract

Climate policy uncertainty (CPU), driven by the need to address climate extremes and environmental degradation, significantly impacts the strategic corporate investments (CI) of energy firms. This study examines the influence of CPU on CI within the energy sector, with a particular focus on the moderating role of corporate social responsibility (CSR). Utilizing an empirical approach and a dataset of U.S. energy firms, the research reveals that CPU negatively affects CI, even after controlling for firm-specific factors such as size, financial leverage, and profitability. The study also uncovers a complex relationship between CSR and CI under conditions of CPU. While CSR is beneficial for firms' long-term growth and financial health by promoting sustainable practices, it can also intensify the negative impact of CPU on CI for firms with limited financial resources.

The findings highlight the critical need to investigate the interplay between CPU, CSR, and CI in the energy sector. This research contributes to energy economics by providing insights into how CPU and CSR shape CI, offering a nuanced perspective on the dual role of CSR in the context of CPU. The results are of academic significance and have practical implications for corporate strategy, policymaking, and investment decisions in an industry central to global climate action and economic progress.