Corporate intentions to participate in emission trading

The adoption of the Kyoto Protocol in 1997 has led to increasing business interest in
the issue of climate change. It has also created much uncertainty for companies, particularly about the role of trading in realizing emission reductions. This paper investigates what drives multinational corporations to show interest in emission trading
and carbon offset projects to deal with climate change. On the basis of an analysis
of data of 136 companies derived from a questionnaire, it also examines the role that
country of origin, industry affiliation and companies’ environmental strategy play in
this regard. Findings show that industry pressure and product and process innovations
are the main determinants for multinational corporations to participate in the emission market. It appears that climate policy particularly induces energy-related industries to reduce emissions, which puts them ahead of other industries with regard to their interest in emission trading. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.