 The Impact of Carbon Pricing on Corporate Sustainability: Evidence From the European UnionC. José García, Begoña Herrero and Francisco Morillas‐Jurado Business Strategy and the Environment, 2026, vol. 35, issue 3, 3218-3232 Abstract: The European Union (EU) has played a leading role in the fight against climate change. One mechanism used to meet the targets for global greenhouse gas (GHG) emission reductions is carbon pricing. A prominent example is the EU Emissions Trading System (EU‐ETS). This study examines the effectiveness of political decisions to pursue environmental objectives from a firm‐level perspective. The aim of this research is to analyse how carbon prices affect firm‐level GHG emissions and environmental innovation. We also examine the relationship between environmental innovation and corporate GHG emissions, both independently and after including the effects of carbon pricing. Our findings show that carbon prices have a negative relationship with corporate CO2 emissions and a positive relationship with green innovation in low‐carbon technologies. Our results confirm that green innovation exerts a limited impact on GHG emissions, with carbon prices acting as the main driver of corporate GHG emission reductions. Date: 2026 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:bstrat:v:35:y:2026:i:3:p:3218-3232 Ordering information: This journal article can be ordered from Access Statistics for this article Business Strategy and the Environment is currently edited by Richard Welford More articles in Business Strategy and the Environment from Wiley Blackwell |
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