Going green, growing strong: how climate policy boosts US companies performance

Imran Ramzan and Kashif Ali

Climate Policy, 2025, vol. 25, issue 4, 593-611

Abstract: In response to natural disasters and environmental concerns, the importance of climate policies has significantly gained attention at a global scale including in the United States. The U.S. is re-entering the Paris Agreement in response to the growing severity of climate-related concerns. This move aims to address the urgent need for effective climate policies and highlights the significance of CSR sustainability committees in enhancing both climate and overall business performance. In this vein, this study investigates how climate policy and CSR sustainability committees impact U.S. energy firms. Drawing on a rich dataset extracted from the Refinitiv Eikon database, spanning the years 2004–2021, we apply panel regression incorporating both industry and time-fixed effects. We find that climate policy has a positive association with firm performance. We argue that firms with a climate policy are better positioned to save costs, enhance their reputation, drive innovation, and ultimately improve firm performance. We also find that the CSR sustainability committee is positively associated with firm performance. We claim that the presence of a CSR sustainability committee integrates sustainability into core strategies, enhancing performance by aligning with societal needs and engaging stakeholders. Our empirical findings have important policy implications for corporate managers, investors, and policymakers, highlighting the need to promote the adoption of climate policies and establish CSR sustainability committees, which can contribute to both improved climate outcomes and enhanced firm performance.This novel ‘climate policy index’ is well-suited to assist U.S. regulators in gauging the importance of environment-related policies and their role in advancing ‘The Federal Sustainability Plan’.Firms should proactively develop and integrate comprehensive climate policies into their operation. This can involve setting measurable sustainable goals, investing in green technologies and adopting practices that reduce environmental impact.The strategic implementation of climate policies not only serves to harmonize the decision-making processes of firms within the U.S. and other global economies but also empowers them to remain in accordance with their environment-related obligations, all in pursuit of the shared goal of curbing global warming.Emphasize integrating climate and CSR initiatives as a strategic approach to improve overall firm performance and achieve better environmental outcomes.

Date: 2025
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DOI: 10.1080/14693062.2024.2407832

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