Drawing on the recent enthusiasm in the carbon markets, I examine the impact of carbon prices on firm greenhouse gas (GHG) emissions. Using a sample of 1591 firms from 23 European countries, I demonstrate that an increase in carbon price decreases corporate GHG. At hypothesized higher carbon pricing levels, I document that the effect of pricing on corporate GHG emissions is negative. The negative impact of high carbon prices manifests in other harmful gases such as sulphur and volatile organic compounds (VOCs). In evaluating how the various phases of the EU emission trading scheme have affected firm greenhouse gas emissions, I show that the negative effect of pricing became pronounced in Phase 3 of the EU ETS. The findings from this study are robust to alternative econometric specifications and further sample selection criteria.

Several firms have joined emission trading schemes in response to the call for corporate climate action. Using a comprehensive international data set on corporate membership of emission trading schemes (ETSs), we find that members of the scheme emit more CO₂ than non-participants. This result also holds when exploring the corporate discharge of sulphur and volatile organic compounds (VOCs). The magnitude of this relationship persists even in the long run showing little evidence of a reduction from the firms in polluting the environment. We also find that firms that select to exit the scheme continue to pollute at a higher rate in the following years. Firms that enter the scheme for the first time increase their pollution in the following years. Although we identify significant differences at a country and continental level on the effectiveness of ETSs, our results raise some concerns about ETSs' role.

This paper investigates the effect of an overconfident CEO on firm greenhouse gas emissions. Using panel data of 160,115 firm‐year observations from 41 countries for 2000–2021, we find a negative relationship between CEO overconfidence and greenhouse gas emissions. Additionally, drawing on the theories of gender socialisation and diversity, we find that great representation of females on the board further compels overconfident CEOs to reduce firm carbon emissions. Our findings are robust to varying estimation techniques and identification strategies. These findings offer important insights to green investors, corporate boards, managers and policymakers on the role of overconfident CEOs and female leadership in the carbon abatement efforts of public companies.