Corporate Political Ideology and Environmental Strategy: Evidence From US Toxic Releases

Abstract

ABSTRACT This paper examines whether corporate political ideology shapes firms' environmental strategy and realized environmental performance. Using US political donation data matched to facility‐level toxic releases from the Toxics Release Inventory from 2000 to 2014, we measure corporate ideology by the share of firm and PAC contributions directed to Republican candidates. We find that facilities owned by more Republican‐leaning firms release significantly more toxic chemicals, even after controlling for governance, firm characteristics, CEO and director ideology, local political preferences, and facility fixed effects. Additional analyses show that these firms have higher pollution intensity and are less likely to report good operating practices, linking ideology to operational environmental routines rather than only external political engagement. The findings contribute to research on corporate environmental strategy by showing that political orientation helps explain how firms manage environmental externalities and provides stakeholders with information about underlying environmental priorities in a polarized political and regulatory environment.