Corporate sexual orientation equality and carbon emission

Abstract

Does a firm’s tolerance and nurturing of its alternate sexual orientation employees influence its long-term sustainability? Using the corporate sexual orientation equality (CSOE) environment, we show that firms with higher CSOE ratings emit less greenhouse gas (GHG) thereby ensuring long-term sustainability. In addition, we report that the aforementioned CSOE-GHG relationship is stronger for firms with less agency issues (e.g., less powerful CEOs and more monitoring). Finally, we find that carbon emitting firms (CEFs) that invest in higher levels of CSOE initiatives are not doing it for external rewards (e.g., they suffer from lower firm valuation and face a higher cost of raising capital).