Carbon emission reductions and offsets: Consumer perceptions of firm environmental sustainability

Abstract

This paper studies how carbon emission reductions and offsets influence consumer perceptions of firm environmental sustainability. We hypothesize that consumers perceive firms that reduce (vs. offset) internally (vs. in the supply chain) as more sustainable, since these options are perceived to take more effort, used as a heuristic for altruism and sustainability. We also hypothesize that knowledge about climate change and offsets reduce the reliance on effort. The results from three experiments show that firms that reduce are perceived as more sustainable than firms that offset emissions, and that this effect is mediated through perceived effort and altruism. Reducing or offsetting internally (vs. in the supply chain) does not influence perceived sustainability, and knowledge about climate change or offsets does not reduce the effect of reduction (vs offsets). Employee participation in the offsetting does not increase perceived effort and sustainability.