Aligning firms with SDGs and COP30: The comparative power of voluntary and regulatory climate commitments

This study aims to examine the comparative and joint association of voluntary and regulatory climate governance mechanisms with firm-level carbon emission intensity. Specifically, it investigates whether participation in the Science Based Targets initiative (SBTi) is associated with stronger reductions than exposure to the European Union Emissions Trading Scheme (EU ETS), and whether the two mechanisms operate as complements. SBTi adoption is negatively and statistically significantly associated with firm-level emissions intensity across the baseline difference-in-differences, matching, and firm fixed-effects specifications. The estimated SBTi coefficients correspond to an approximately 25–28% lower emissions intensity, depending on the specification. EU ETS exposure is associated with a smaller reduction of approximately 7%. The negative SBTiEU ETS interaction indicates an additional but modest reduction among firms exposed to both mechanisms, supporting a complementary rather than substitutive relationship. The placebo estimate is statistically insignificant, and the negative SBTi association remains present in both ETS and non-ETS subsamples. However, significant pre-adoption differences in the event-study analysis limit strong causal interpretation; the results are therefore presented as robust comparative associations rather than definitive causal effects.