What factors - external and internal - influence a firm's choice of voluntary greenhouse gas mitigation activities?

This research provides the first empirical evidence on an aspect of a topical debate about firms’ claims over their use of renewable electricity. Increasingly firms – many among them the biggest globally – say they use renewable electricity (RE). Unless they generate their own electricity, they often make this claim based on the use of green tariffs or certificates that document the production of a quantity of RE. However, several studies indicate that such contractual instruments have done little to increase RE generation capacity in Europe. Furthermore, it has been argued this activity could impede other actions by firms that reduce carbon emissions. As firms frequently attribute zero emissions to their electricity consumption covered by these renewable electricity contractual instruments, their reported emissions can plummet. This could reduce the motivation for activities such as improving energy efficiency – a possibility which has not been investigated before empirically. Focusing on 11 of the largest firms in Europe, I ask what factors influence their voluntary greenhouse gas mitigation choices regarding renewable and low-carbon electricity contractual instruments. Secondly, I ask what effect their use has had on their other greenhouse gas mitigation activities. Taking an institutional theory and Corporate Social Responsibility (CSR) perspective, I integrate documentary evidence on firms’ carbon emissions and mitigation activities – in some cases employing more than a decade of data - with interviews with managers and senior staff. I conduct multiple case studies, selecting firms to facilitate analytical generalisation (Yin 2014). A key insight into the influences on firms was the power of CSR ratings agencies. I found instances of firms making or considering changes to operational practice – such as renewable electricity contractual instrument use - due to rating agencies. Displacement and potential displacement of firms’ focus on other mitigating activities was found in limited circumstances. For energy efficiency/savings, this depended on three circumstances which I characterize. I assess the possible outcomes if expenditure on contractual instruments had been spent instead on internal mitigating activities e.g. energy efficiency or on offsets. Based on my findings, I recommend specific changes to carbon reporting practices that are relevant to firms, policy-makers and standard-setters.