28 Apr 2026
Amid the global drive for sustainable development and carbon neutrality, the interplay between climate beliefs and corporate behaviour has emerged as a pivotal cross-cutting focus spanning business ethics, corporate finance and public policy. A long-unresolved core question remains: in regions with stronger public climate concerns, are corporations more willing to bear higher public tax burdens to support collective climate governance, or more inclined to leverage green tax policies to reduce operational costs? As ESG principles become deeply embedded in daily business operations and strategic decision-making, how can firms strike a delicate balance between shareholder value maximisation and their obligations as responsible corporate citizens?
Recently, Dr Lei Zhang, Assistant Professor at the International Business School Suzhou (IBSS), Xi’an Jiaotong-Liverpool University (XJTLU), as the first and corresponding author, has collaborated with an international scholar to publish the landmark research paper Climate Beliefs and Attitudes and Corporate Tax Savings in Journal of Business Ethics. As a JCR Q1, Tier 1* premier academic journal and a core title on the prestigious Financial Times 50 (FT50) list of top business journals, it holds an influential position as a global benchmark in business ethics research. With an impact factor of 6.7, the journal is renowned for its rigorous peer review standards and outstanding worldwide academic reputation.
Research Background: Addressing the Ethical Dilemmas Within Green Transition and Taxation
Conventional academic theories and mainstream public perception generally assume that enterprises and communities with robust climate beliefs and a strong sense of environmental responsibility will proactively fulfil their tax obligations and refrain from aggressive tax planning to fund public environmental initiatives. In practice, however, economies worldwide have introduced a comprehensive suite of policy incentives to accelerate low-carbon transition, including climate-focused R&D tax credits, green investment tax concessions and pre-tax deductions for eco-friendly equipment upgrades.
This has given rise to a critical yet under-examined contradiction. While governments design green tax incentives to motivate corporate low-carbon investment and advance holistic climate governance, firms that legally utilise these preferential policies effectively lower their effective tax rates. This inevitably curtails public fiscal revenue available for state-led climate action and environmental public services.
It remains underexplored how regional social climate beliefs and attitudes (CBA) shape corporate tax strategies, what heterogeneous effects exist across industrial sectors and institutional contexts, and the underlying transmission mechanisms at play. These inquiries extend far beyond corporate financial decision-making, touching upon fundamental ethical issues including distributive justice, conflicts between private financial incentives and collective environmental goals, and the social contract between businesses and society.
To address these pressing research gaps, Dr Zhang’s research team adopted a comprehensive empirical framework. Drawing on a 20-year longitudinal panel dataset of listed US companies from 2000 to 2020 and county-level climate belief indicators developed by the Yale Programme on Climate Change Communication, the study adopted rigorous empirical designs and extensive robustness tests to systematically unpack the causal relationship, influencing mechanisms and boundary conditions linking regional climate beliefs and corporate tax-saving activities.
Core Research Findings: Stronger Climate Beliefs Correlate with Higher Corporate Green Tax Savings
Based on large-sample empirical analysis and comprehensive endogeneity mitigation, the study establishes three robust, innovative and theoretically insightful conclusions:
- Regional climate beliefs positively and significantly drive corporate tax savings
Enterprises headquartered in counties with high climate belief and attitude (CBA) scores are more motivated to actively adopt climate-related preferential tax policies, resulting in a substantial reduction in GAAP-based effective tax rates. This core finding remains statistically significant after controlling for firm size, industrial characteristics, regional socioeconomic factors and alternative tax-saving measurement indicators, verifying high empirical reliability and generalisability.
- Clear transmission mechanisms: green R&D investment and corporate environmental commitments
Climate beliefs do not exert direct impacts on corporate taxation; instead, they function through distinct intermediate pathways.
Heightened regional climate beliefs strengthen corporate climate accountability, driving substantial increases in climate-related research and development expenditure.
Firms respond to prevailing social norms by issuing formal public environmental commitments and enhancing internal environmental management performance.
Improved environmental credentials enable businesses to qualify for targeted green tax incentives and investment tax credits, ultimately translating into reduced corporate tax liabilities.
- Heterogeneous effects: industrial attributes and regional climate policies amplify core relationships
The impact of climate beliefs on corporate tax planning demonstrates notable cross-group heterogeneity.
The positive correlation is markedly stronger in climate-vulnerable sectors, including agriculture, energy, food production, transportation, healthcare, professional services and telecommunications.
In US states with formal, statutory climate adaptation action plans, formal institutional frameworks align closely with pro-climate social norms, strengthening policy implementation and magnifying corporate green tax-saving behaviours.
To further validate causal inference and eliminate confounding variables, the research team adopted multiple exogenous shock identification strategies, including major hurricane disaster events, the staggered implementation of state-level climate adaptation policies and cross-regional corporate headquarters relocations. All supplementary tests consistently confirm that rising local climate beliefs significantly incentivise firms to capture greater green tax benefits.
Theoretical Breakthrough: Uncovering a Groundbreaking Business Ethics Paradox
The study’s most distinctive theoretical contribution lies in identifying and elaborating on an unprecedented business ethics paradox at the intersection of sustainability and corporate taxation.
On one hand, businesses operating in high climate-belief regions demonstrate genuine commitments to sustainable development through tangible green innovation, environmental R&D investment and standardised environmental governance, distinguishing their actions from superficial greenwashing practices.
On the other hand, these environmentally proactive enterprises engage in more proactive, law-compliant tax optimisation via green policy frameworks. The resultant reduction in corporate tax contributions indirectly limits government fiscal capacity to fund cross-regional climate mitigation, adaptation and essential public services.
This paradox creates profound tensions between the pursuit of shareholder value maximisation and the social responsibilities of modern corporate citizenship. It challenges long-standing conventional wisdom that environmentally responsible firms inevitably bear higher tax burdens, and offers critical new perspectives for academic discussions and policy deliberations on green tax reform, social norm governance and the coordination of formal institutional arrangements.
Multidimensional Implications: Insights for Academia, Policymakers and Corporate Stakeholders
For academia: Forging new research frontiers in climate finance and tax ethics
This research pioneers an integrated analytical framework that bridges county-level social climate beliefs and corporate tax avoidance behaviours. It enriches the expanding body of literature on the socioeconomic consequences of climate cognition, fills critical research gaps regarding how informal social norms shape corporate financial strategies, and delivers novel theoretical foundations and empirical evidence for interdisciplinary research covering climate finance, business ethics and corporate governance.
For policymakers: Informing evidence-based optimisation of green tax systems
The empirical findings deliver actionable guidance for the refinement and rational design of environmental tax regimes.
Regional public climate attitudes are pivotal determinants of policy acceptance and implementation effectiveness, requiring policymakers to integrate informal social norms with formal regulatory frameworks during policy formulation.
While green tax incentives effectively stimulate low-carbon industrial transformation, targeted accounting regulations and enhanced regulatory oversight are essential to prevent the arbitrary reclassification of routine operational expenditure to secure unjustified green tax relief.
Prioritised policy rollout within climate-sensitive industries and regions with mature climate governance frameworks can substantially improve the cost-efficiency of national climate policies.
For corporate managers and investors: Facilitating integrated ESG and financial strategy development
The study offers practical strategic references for sustainable business management and responsible investment.
Enterprises embedded in pro-climate regions may legally and ethically utilise green tax savings to reinvest in long-term sustainable transformation and low-carbon operational upgrades.
Organisations are encouraged to integrate tax planning holistically into overarching ESG frameworks, aligning financial decision-making with stakeholder expectations and global sustainable regulatory trends.
Adopting a long-term value-oriented governance model enables firms to balance legitimate tax optimisation with social accountability, fostering resilient, future-proof and sustainable business models.
Researcher Profile & Funding Acknowledgements
Dr Lei Zhang
Dr Lei Zhang serves as Assistant Professor in Accounting at the International Business School Suzhou (IBSS), Xi’an Jiaotong-Liverpool University. His primary research interests span financial accounting, climate finance, environmental economics and corporate tax behaviour. His research works have been widely published in leading international peer-reviewed journals, including Journal of Business Ethics (X2), European Accounting Review, Management International Review, Journal of Travel Research, Energy Economics and Renewable and Sustainable Energy Reviews, earning extensive recognition from the global academic community.
Research Funding
This research was supported by the National Key Research and Development Programme of China (Grant No. 2023YFA1009204) and the Social Sciences and Humanities Research Council of Canada (Grant No. 435-2025-1543).
Journal Introduction
Published by Springer, Journal of Business Ethics is a world-leading scholarly journal in the field. Boasting an impact factor of 6.7 and a JCR Q1, Tier 1* ranking, it is officially listed in the authoritative Financial Times 50 (FT50) top business journal catalogue. Widely respected for its stringent peer review process, high academic rigour and enduring scholarly influence, the journal remains a core authoritative platform for cutting-edge research across global business and applied ethics.
28 Apr 2026