Xuanyu Yue

Abstract

My dissertation consists of three research papers that aim to evaluate corporate environmental performance, estimate the relationship between demand and supply in the aviation market and the effects on aviation-related carbon emissions, and decompose CO2 emissions for airlines.

The first paper, we assess the impact of various corporate stakeholders, and national culture on the environmental performance of firms. Growing concern surrounding the effects of climate change means that individuals are placing increasing value on goods and services based on their resource efficiency. As a result, environmental, social, and corporate governance (ESG) factors are becoming more important to stakeholders. Our study draws together two theories; namely stakeholder theory and Hofstede’s Cultural Dimensions Theory to explore the influence different groups of stakeholders have in shaping the environmental performance of a firm while also taking account of national cultural differences. Within the stakeholder theory framework, many different stakeholders of the organization will exert their influence to pursue both economic goals and non-economic goals such as corporate environmental strategies We apply hierarchical linear modelling to a sample of 4,534 firms across 23 countries to examine the influence different stakeholders have on the environmental performance of a firm. We find that when stakeholders are well-protected at the country level, they use their influence to compel firms to improve environmental performance. Further, we find that internal stakeholders are more influential in shaping corporate environmental performance than their external counterparts, and that national culture matters.

The second paper identifies the determinants of air passenger flows and flight frequency, and assesses their impact on carbon emissions and carbon efficiency. Increasing global concern regarding the negative consequences of climate change will see the introduction of comprehensive policy governing aviation-related carbon emissions. In an effort to recognize the impact of aviation on climate change, the International Civil Aviation Organization (ICAO) included a goal of ensuring carbon neutral growth from 2020 onwards while also aiming to achieve an annual two percent improvement of fuel efficiency up to 2050. With demand for air travel set to accelerate over the next three decades airlines are faced with the task of catering to increased demand while simultaneously achieving emission reductions. Confining our analysis to the European market, we employ Fixed-Effects (FEIV) and Random-Effects (REIV) instrumental variables modelling techniques to 150 intra-Europe routes and find that the factors that are significant in influencing the operational planning decisions of an airline often lead to carbon inefficiencies. Our findings have important implications for both airlines and policymakers. For airlines, we show how the decisions they make to optimize operations can have negative environmental consequences, while we make suggestions as to how policymakers can incentivize airlines to achieve emissions reductions.

The third paper aims at identifying the most important determinants of carbon emissions in aviation by implementing Log-Mean Divisia Index (LMDI) modelling at the firm level. Increasing global demand for flights coupled with a focus on mitigating climate change will soon see the introduction of more stringent policy governing carbon emissions from aviation. Airlines face the challenge of catering to increased demand while achieving carbon reductions. We find that changes to capacity account for at least 40% of the changes in emissions for most airlines. We subsequently conduct decoupling analysis to investigate the extent to which individual airlines have been successful in breaking the link between expanding scale and carbon emissions and suggest ways to achieve a desired decoupling state. LMDI at the micro level is more informative in this instance as airlines will be better equipped to achieve the optimal balance of servicing the market while simultaneously reducing emissions to comply with forthcoming policies.