Introduction

Concerns about implementing solutions to address climate change have increased during the last decades due to its consequences for society, involving both national governments and companies (^{Akbaş & Canikli, 2018}; ^{Amran et al., 2011}; ^{Moya-Clemente et al., 2019}). This interest has motivated the development of different international agreements to avoid an increase in global temperature, with governments and companies expressing their willingness to be part of the solutions, from the Rio Earth Summit and the Kyoto Protocol to the Paris Agreement and COP 26 Summit (^{IPCC, 2018}; ^{Wijen & Ansari, 2012}).

During this time, national governments and companies have been considered two main actors facing this climate crisis based on their resources and capabilities, especially the latter (^{Wright & Nyberg, 2017}). Particularly, the role that firms have is relevant because they have the necessary resources to design, develop, and implement solutions that contribute to the decrement of emissions, but at the same, they have the required innovation to decarbonize the global economy (^{GlobeScan, 2019}; ^{Wright & Nyberg, 2017)}. On the other side, national governments are establishing ambitious objectives for 2030, like reducing 40% of national emissions and incorporating strategies for sustainable energies, legal obligations to adopt domestic mitigation, and the establishment of transparent public disclosure (^{European Commission, 2016}).

Despite the strategies developed by both, the results of these agreements have not been enough (^{Mann & Kump, 2015}; ^{Talbot & Boiral, 2015}). For this reason, the United Nations (UN) adopted in 2015 an initiative related to Sustainable Development Goals (SDGs), which have joined national governments and companies to clarify the path to a sustainable world. One of these goals, named Climate Action, is focused especially on addressing climate concerns through the accomplishment of different targets aimed at greenhouse gas (GHG) reductions, in which private and public institutions have expressed their desire to take part (^{Busch & Lewandowski, 2018}; ^{Qian et al., 2020}).

Based on the importance of these climate issues, scholars have been motivated to develop studies that integrate the role that companies have in increasing GHG emissions, addressing the influence that corporate governance has on the decision-making process to solve different concerns, such as climate change, exerting practices that support the solution of these matters, but at the same time, maximize the value of the company, taking as a result, a market-oriented approach (^{Aguilera & Jackson, 2010}; ^{Husted & Serrano, 2002}).

Consequently, firms have started to integrate solutions encompassing climatic aspects, i.e., carbon schemes, target emissions, energy efficiency, and renewable energy sources. Such implementations have increased the role that companies have towards climate change, responding to the demands exerted by stakeholders for the integration of actions that contribute to the decrement of emissions (^{Hoang Duc & Do Ba, 2017}; ^{Yunus et al., 2016)}.

Such implementations are derived from the role that corporate governance has in the supervision and direction of the strategies developed by firms (^{Kiel & Nicholson, 2005}). However, in the management literature, there is not a current consensus about those practices, methods, or concepts that tackle efficiently this climate threat, increasing the interest of scholars and practitioners in the development of studies to address this phenomenon.

For example, one of the attempts to clarify climate-related practices is the work of ^{Galbreath (2010)} who suggests five corporate practices to examine their effect on climate change, i.e. board oversight, management execution, emission accounting, public disclosure, and strategic planning as mechanisms to tackle it. Also, ^{Tang & Luo (2014)} categorized ten carbon management practices into four areas: carbon governance, carbon operations, emission tracking, and reporting, and engagement and disclosure. These practices suggest a positive effect on the environmental performance of companies, influencing GHG reductions. Complementary, ^{Hoang Duc and Do Ba (2017)} identified various practices implemented to assess climate performance. They identified four categories that encourage climate activities in multinational subsidiaries: self-regulation and information, process improvement, product development, and transferring and trading.

Despite the interest that researchers and practitioners have in the influence of corporate governance on climate change, we still lack a systematic understanding of their impact at a firm level, suggesting the need for a systematic review that extends the current understanding of this gap. For this reason, we propose the following research questions:

Based on these research questions, our paper aims to identify the common variables used in the literature to address this climate crisis from a corporate governance perspective. The second purpose of this study is to distinguish the methods that have been widely used in the literature to examine this phenomenon, as well as recognize the regions examined in previous studies that might guide novel perspectives. Finally, the sources of information are the last objective of this paper to provide a basis for future studies that might use triangulation to enhance their explanation.

Our methodological perspective is a systematic literature review. In the first step, we scan the fields of business, management, finance, and economics in a reproducible way. This process permits to decrease in the probability of missing relevant studies. Second, we explain the exclusion process to simplify future updates. Third, we include the findings that might help readers better understand the field. Using this systematic review, we intend to create new knowledge about this topic through quantitative and qualitative studies.

Our findings suggest four main areas used to examine this relationship: policies, innovation, operations, and legitimacy, measured through multiple indicators. For policies, environmental schemes, the use of indicators and certifications, and the creation of committees to quantify the company’s performance are widely used by researchers. For the innovation variable, product development, and stakeholder engagements are common methods to address this phenomenon. For the operation variable, environmental certifications and policies, as well as the establishment of target emissions and emission trading schemes in corporate activities are mechanisms used by researchers to measure this variable. Finally, the legitimacy variable has been explored through stakeholder engagement, where the firm’s environmental reports and corporate environmental indicators, such as emission accounting and carbon performance, have been used by scholars.

Also, the most common methods to address this phenomenon were regressions, i.e., ordinary least square and panel data models. The use of content analysis, conceptual papers, literature reviews, and cases of study were frequently addressed in the qualitative approach. The application of mix-methods was not commonly explored in the studies, where a complimentary analysis that integrates both perspectives might be necessary for future examinations.

Concerning data sources, the Carbon Disclosure Project is widely used given the information that it provides related to GHG. Another important data source identified is companies’ annual reports, which contain information provided directly by firms related to emissions, policies, and strategies.

The regions mainly addressed in these studies are developed globally, analyzing more than three countries. Nevertheless, one of the main regions examined is Australasia, especially Australia, followed by North America (the US and Canada), Europe (mainly the UK), and Asia (primarily Japan, China, and Russia). Despite the importance of these regions, it might be worthwhile to address other economies given their contribution to GHGs for example, India, Indonesia, Saudi Arabia, Pakistan, and Thailand. The Latin American region is not addressed in the sample, which creates an exciting context to be considered given that some economies such as Brazil and Mexico are regarded as significant GHG contributors (^{WRI, 2020)}. The journals addressed by researchers are mainly Business Strategy and the Environment due to the aim and scope of this publication in the management field, followed by the Journal of Business Ethics whose perspective concerning ethical issues in the business context is relevant.

The rest of the paper is organized as follows. In the first section, we present the relevance of this field in the management literature. Next, we explain the method used for this review. Then, we focus on the results provided by this analysis. Finally, we present our conclusions and prospective from this review.

1. Corporate governance and climate change

The relevance of corporate governance is based on its importance in the decision-making process to implement mechanisms that address corporate issues, such as climate change, encouraging managers to cope with such concerns, and at the same time maximize the value of the firm (^{Rodriguez-Jasso et al., 2021}; ^{Teixeira et al., 2016}).

Consequently, managers and decision-makers might design, develop and implement strategies to face such concerns and increase the benefits for shareholders’ and investors’ interests, aligning their objectives with the owners’ concerns, and reducing the asymmetries of information (^{Coles et al., 2001}; ^{Queen, 2014}).

The management literature identifies various corporate governance systems. One of these is the Anglo-American, which is characterized by short-term equity financing, substantial shareholder rights, and dispersed property. On the other hand, the European system has long-term equity financing and property of concentrated blocks. Both systems have similarities, such as the presence of incentives, authority patterns, and legitimacy norms, which encourage specific characteristics in the behavior of the companies that generate competitive advantages and facilitate the investors’ opportunities (^{Carney, 2005}; ^{Hall & Soskice, 2001}).

Corporate governance is a crucial element in the achievement of benefits for the company, where the use of specific assets, knowledge exchange, and the resources and capabilities of the firm are essential elements to develop by this governance to fulfill the corporate expectations and strengthen its legitimacy in the market, increasing its competitive advantages (^{Lehn, 2021}).

In terms of climate change, the pressures coming from these stakeholders influence the adoption of management practices that reduce the impact of corporate operations, and encourage the establishment of emission objectives, making corporate governance an essential element for the success of these actions (^{Sullivan & Gouldson, 2017}; ^{Freeman, 1984}).

Based on the importance that corporate governance represents for the strategic direction of the firm, it has motivated the development of studies that address this concern. ^{Damert & Baumgartner (2017)} conceptualize these governance structures as market and non-market actions to reduce emissions and legitimate corporate activities. Their study suggests eleven activities to promote climate mitigation which are categorized into four main areas: governance, innovation, compensation, and legitimacy.

^{Galbreath (2010)} proposes some corporate practices to address climate change based on the proposition of the Coalition for Environmentally Responsible Economies (CERES) through five dimensions: board oversight, management execution, emission accounting, public disclosure, and strategic planning. ^{Tang & Luo (2014)} suggest a model that integrates ten corporate climate practices related to carbon management and classifies them into four categories: governance, operations, monitoring of emissions and reporting, and disclosure, having an impact on climate performance.

An additional study developed by ^{Hoang Duc & Do Ba (2017)} identified climate policies implemented in an emergent economy and classified them into four areas: self-regulation and information, process improvement, product development, and trading. Their findings suggest that these policies permit an assessment of the corporate’s performance and adapt the necessary practices to address climate change effectively. Finally, ^{Damert et al. (2017)} examined the influence of corporate policies on financial and carbon performance having three common aspects: governance, reduction, and competitiveness. Their findings suggest that governance is related to the management capabilities to face risks and opportunities that imply climate change, and different mechanisms to achieve it.

As a result, firms have started to address climate change in different manners, i.e., implementing carbon schemes, establishing emission targets, producing efficient energy, and producing renewable energy, to reduce the pressures exerted on them by different stakeholders in the implementation of climate solutions (^{Hoang Duc & Do Ba, 2017}; ^{Kawai et al., 2018}). The integration of practices aimed at mitigating carbon emissions varies according to the industry. The uncertainty in climate policies besides the trade-offs between sustainability and economic performance encourages a reactiveness towards these implementations (^{Abreu et al., 2017}; ^{Amran et al., 2015}) Nevertheless, the increasing pressures from consumers, investors, and regulators incite a transformation in the current market logic framed by the economic perspective to a sustainable framework that considers the integration of climate change into their decision process (^{Ganda, 2018}; ^{Yunus et al., 2016}).

The importance of climate change in the management literature is increasing, which demands studies that analyze the practices implemented by companies to address this climate threat and provide a better understanding of the practices that effectively face this phenomenon. Corporate governance is crucial in achieving these emissions reductions, supporting the decision-makers to implement policies that strengthen such objectives (^{Kılıç & Kuzey, 2018}; ^{Tang & Luo, 2014}).

2. Research method

Research on corporate governance and climate change encompasses a variety of data, theoretical perspectives, study designs, and analytical methods leading to a disjoint body of literature. For this reason, it is complicated to analyze the results of accumulated research in the arena, where a literature review becomes important for scholars and practitioners to comprise this complexity (^{Gough et al., 2017}; ^{Torraco, 2016}). For scholars, this review allows the creation of new knowledge based on the existing literature, facilitating theory development, addressing gaps, and having a better understanding that generates interesting questions that lead to future research. For practitioners, this review might provide relevant insights about effective implementations for future business strategies that guide the policy-making process (^{Bodolica & Spraggon, 2018; Velte et al., 2020}).

Based on this, we followed an established process for this systematic review (^{Denyer & Tranfield, 2009}). Firstly, to map and analyze the relevant literature we clarified our research objectives by establishing the research questions and using them to guide the review. Using these questions we defined the dataset and keywords, and limited the range of years, adopting a replicable and clear procedure to decrease bias in the search and selection of studies, enhancing its objectivity (^{Tranfield et al., 2003}). Table 1 shows the review protocol used for this study.

Second, we outlined the constructs we wanted to search in the literature framing our expectations about the existing research gaps. We used specific terms and searched them in the Web of Science (WOS), which has indexed journals with high impact factors compared to other databases instead of predefining journals (^{Li et al., 2017}; ^{Severo et al., 2021})but this field of study still needs to be better depicted and understood because violations of its core principles still frequently occur worldwide. In this study, our goal was to perform a bib-liometric performance and network analysis (BPNA. The search string used included relevant keywords (“corporate governance” AND “climate change”, “global climate” AND “corporate governance”, “transnational” AND “climate governance”, “governing AND climate change”, and related terms). Figure 1 shows the research process with the number of studies gathered in each stage. The total number of documents was 4 072.

Third, we established the study filters. We limit to those studies that belong to the management, business, finance, and economics categories. We did not restrict the period of the studies (1980-2019) or the country of origin. We considered quantitative and qualitative articles published only in peer-reviewed journals. Even though we did not limit the quality of the journal, the vast majority were journals Q1 and Q2. A great number of articles used secondary data for their dependent, independent, and control variables, and few of them used primary data.

Fourth, we developed the study selection. We filtered the studies to ensure no article duplicity because some of them appeared in different search strings (29 exclusions). Then, we scanned the titles and abstracts of the manuscripts to identify those relevant papers to read, not pursuing articles that match the exclusion criteria (165 exclusions). We filtered through the number of citations excluding those with 14 or lower to increase the relevance of the documents analyzed (60 exclusions). The screening process provided a final sample of 45 studies.

Fifth, we performed an depth analysis. We scanned the paper’s main features, i.e., research questions, the study’s purpose and contribution, the journal published, the method section, variables analyzed, measurements used, data sources, and main results. We create a matrix to order and give structure to the information extracted from the studies analyzed (^{Garrad, 2004}). The studies’ final sample was read in-depth to verify the studies’ features and main information identified in the evaluation step. Figure 2 shows the literature review process.

Source: elaborated by authors.

Figure 1 Selection of the studies 

Source: elaborated by authors.

Figure 2 The systematic literature review process 

3. Findings of the literature review

Limitations and prospective for future research

This study highlights a variety of corporate governance practices on climate change addressed in the literature. However, Figure 3 shows that these variables might be extended by addressing additional research paths (RP) in line with corporate governance, i.e., board composition or board interlocks from an agency perspective. Specific board features might be addressed in detail in further analysis, such as educational background, board members’ age, Chief Executive Officer (CEO) duality, gender, and nationality.

Researchers should include in their future analysis external and internal audits, which are not commonly explored in the literature. Also, they might complement the carbon assurance measure traditionally used in the literature. Additionally, the business cultural context might provide remarkable insights into the regions explored, for example, Latin America shares a similar system of norms and values that frame the business setting and influence the corporate mechanisms towards climate change.

Source: elaborated by authors.

Figure 3 Main research path 

Lastly, this study presents some limitations. We used the WOS engine to explore and collect studies for this review. Nevertheless, the exclusive use of this database limits the scope of the analysis for other studies, especially with regional. For this reason, other platforms like Scopus and Google Scholar might be used for further analysis. Besides this, we restricted our research to those studies with peer-reviewed journal articles where the inclusion of books or chapters might enhance the examination. Furthermore, our analysis focused on manuscripts with 15 or more citations to ensure their quality. Further examinations might include publications with a fewer number of citations. Also, keywords might be expanded to identify other relevant studies.

A final suggestion for future studies is the use of a quantitative meta-analysis. This research method is useful in examining sustainable studies where the main objective is based on summarizing statistically the current research and improving the quality of the results (^{Dao & Ta, 2020}; ^{Velte et al., 2020}). This review highlights the diverse results of quantitative and qualitative studies. However, through a meta-analysis is possible to develop a moderator analysis across different studies. Based on the increasing interest in climate governance, we expect that future researchers address this phenomenon based on this research method.

Discussion and conclusion

Corporate climate governance is a research field that has attracted the attention of scholars and practitioners both in theory and practice, as well as in the regulatory and research context based on its importance in the establishment of corporate strategies for the integration of mechanisms that address climate change.

Despite a great variety of variables and mechanisms explored in the studies analyzed, four main variables are identified as common ways to address this phenomenon: a) policies, b) innovation, c) operation, and d) legitimacy. For the measurement of these variables, there are different suggestions explored by the authors that might serve as a starting point for novel studies (see Table 7). However, these measurements were explored in specific contexts that do not necessarily provide the same results for a different setting, such as in Latin America, South, or West Asia (see Table 4). These results might be contrasted with the findings explored in previous studies to determine whether or not those variables or indicators offer a similar outcome.

The policy variable has been explored in the literature through several indicators, such as the implementation of environmental policies (GHG management policy, risk management, and opportunities discussed), the use of environmental indicators and certifications (ESG indicators, GRI alignment), and the creation of environmental committees to quantify the company’s performance (CSR and Sustainability committees). The methodology used to create these indicators might be adapted to the context examined, taking into consideration the data availability.

The innovation variable has been examined through the creation of a department aimed at product and process development, as well as the stakeholder engagements as a firm’s mechanism that allows access to new markets. These indicators might be contextualized according to the sample addressed. The operation variable was addressed with the adoption of environmental certifications and policies, such as suppliers’ GHG emission controls, the establishment of target emissions, and trading schemes, where data may vary according to the companies examined. Finally, for the legitimacy variable, the use of stakeholder engagement and the companies’ environmental reports, as well as the firm’s environmental indicators, such as emission accounting and carbon performance were used to examine the disclosure that firms have with their stakeholders and in this manner enhance their legitimacy.

A different context might require the integration of different indicators according to the information provided by companies, where cultural aspects may be a relevant factor to consider. For example, despite the actions implemented by national governments in the establishment of regulations aimed at emission diminishment, companies might implement some mechanisms to address climate change symbolically to enhance their legitimacy and assure survival. For this reason, the integration of different indicators could be necessary to enhance the prediction of the results for novel examinations in such contexts.

This integration might be complementary to the use of a mixed-method approach. The majority of the studies analyzed used a quantitative perspective, where OLS regression models and panel data analysis were the most common methods (see Table 5). Nevertheless, the use of qualitative and quantitative perspectives might be useful to validate the information from self-reports published by firms. The triangulation method in which scholars may lean on different techniques of research with different strategies, sources of information (see Table 6), and diverse points of view might help to reduce the shortcomings of the firms’ self-reports and validate the information produced by them.

The findings from novel studies developed by researchers and practitioners might be disseminated by different journals, the most representative Business Strategy and the Environment, as well as the Journal of Business Ethics, based on the aim and scope of both of them (see Table 3). However, this cannot be considered a limitation for authors.

The climate crisis that faces modern society has motivated the interest of scholars, practitioners, and national governments to find the most effective mechanisms that address GHG emissions. In the management literature, there is not a general agreement on those practices implemented by companies that contribute effectively to this decrement; however, more and more authors are exploring such practices to determine the best mechanisms that practitioners and decision-makers might integrate into their daily operations and contribute to climate mitigation.

Several aspects need to be considered for novel studies, such as the context. Some regions, such as Latin America, might offer unique perspectives given their cultural orientation that might differ from previous studies. Contrasting approaches between regions may be beneficial for the determination of the best corporate practices to implement in the business and management area, always following the same objective, climate change mitigation.