Environmental, social, and governance performance, carbon emissions, and corporate tax avoidance
Year: 2026
Type: article
Abstract: Corporate tax avoidance has become an important concern within corporate law, sustainability governance, and regulatory compliance frameworks. Yet, the relationship between environmental, social, and governance (ESG) engagement and firms’ tax behavior remains inconclusive. This study examines whether ESG performance is associated with corporate tax avoidance and investigates whether carbon emissions intensity conditions this relationship within the context of emerging sustainability and environmental regulatory frameworks. Using a panel dataset of globally listed firms in carbon-intensive industries over the period 2018–2024, this study evaluates how sustainability engagement interacts with environmental exposure to shape corporate fiscal behavior and legal compliance with tax obligations. The empirical results indicate that ESG performance is negatively associated with book-tax differences, suggesting that firms with stronger sustainability engagement tend to exhibit lower levels of tax-planning aggressiveness. Furthermore, the interaction analysis shows that carbon emissions intensity significantly moderates the ESG-tax avoidance relationship. In particular, the negative association between ESG performance and tax avoidance appears stronger among firms with higher carbon emissions intensity, indicating that environmental exposure may amplify the alignment between sustainability commitments and corporate legal accountability and fiscal transparency. These findings remain robust across alternative tax-avoidance measures and dynamic panel estimations. Overall, the study contributes to the emerging literature on corporate law, ESG governance, and fiscal transparency by demonstrating that environmental exposure strengthens the alignment between sustainability engagement and corporate compliance with taxation norms.
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W7202159158