Does Corporate Carbon Performance Converge in the Global Market? Evidence from a Distribution Dynamic Approach

Using a global sample of 19,913 corporations from 76 countries during the 2010-2019 period and the nonparametric distribution dynamics approach, we analyse the transitional dynamics and long-run evolution of corporate carbon performance (CCP). We find that regardless of the period of investigation (pre- and post-Paris Agreement), OECD affiliation, and regional location, most firms converge towards the highest CCP. Furthermore, the results show the emergence of convergence clubs; one around the mediocre CCP level in all samples, and another around a much higher CCP level in the OECD and East Asia & Pacific region samples. Moreover, we document the most significant convergence towards the highest CCP in the OECD countries, Europe & Central Asia region, and ex-post the Paris Agreement (2016-2019). However, the results indicate the least significant convergence and the poorest CCP across the firms from East Asia & the Pacific and North American regions. The results are novel and can be associated with corporate CO2 emissions outsourcing developing countries and with Donald Trump’s presidency