Board Networks and Corporate Carbon Emissions: A Cross‐Country Analysis of Causal Effects

This study examines whether board networks influence corporate carbon emissions and the strategic pathways through which firms decarbonize. Using a sample of 1952 firms across 48 countries from 2003 to 2020, we employ dynamic stacked regressions that exploit exogenous carbon‐regulation shocks affecting firms connected through shared third‐party board memberships. We find that focal firms reduce absolute emissions by about 9%. The effect concentrates in high emitting firms operating under strict environmental regulations, with emission targets and policies, and low financial constraints. However, emission intensity does not improve. This pattern suggests that network‐driven emission reductions primarily reflect divestment or contraction of carbon‐intensive activities, rather than operational decarbonization through technological upgrading. While indirect board ties transmit regulatory responses, overall board centrality does not reduce emissions though it is associated with higher environmental ratings. Our findings challenge conventional wisdom about board networks and highlight their nuanced role in spreading environmental practices.