New Schulich Research Reveals Climate Beliefs Drive Corporate Tax Strategies
TORONTO – Wednesday, March 11, 2026 – New research from York University’s Schulich School of Business finds that companies headquartered in communities with strong climate beliefs and attitudes are significantly more likely to reduce their tax payments by taking advantage of climate-related tax incentives tied to environmental investments.
The study, titled “Climate Beliefs and Attitudes and Corporate Tax Savings”, was recently published in the Journal of Business Ethics and was co-authored by Kiridaran (Giri) Kanagaretnam, Professor of Accounting and Ron Binns Chair in Financial Reporting, Banking and Governance at Schulich, together with Lei Zhang, Assistant Professor of Accounting at the International Business School Suzhou (IBSS), Xi’an Jiaotong-Liverpool University (XJTLU).
The research shows that firms headquartered in counties with strong climate beliefs and attitudes (CBA) are more likely to increase climate-related R&D spending and environmental initiatives, which in turn generate tax credits that lower their overall tax burden.
“Our findings suggest that community attitudes toward climate change can influence corporate decision-making in meaningful ways,” said Professor Kanagaretnam. “Firms located in areas where climate concerns are stronger are more likely to invest in sustainability initiatives – and those investments often qualify for tax incentives that reduce their tax payments.”
The research also shows that the relationship between climate beliefs and corporate tax savings is strongest for firms operating in climate-vulnerable industries and for companies located in states with formal climate action plans.
“Companies are responding to both social expectations and financial incentives,” Kanagaretnam explained. “Climate-related tax credits encourage firms to invest in green technologies and environmental initiatives, but they also reduce public tax revenues that governments rely on to fund broader climate action.”
This dynamic creates what the researchers describe as a business ethics paradox: companies may be genuinely investing in sustainability while simultaneously engaging in tax planning strategies that reduce funds available for public environmental initiatives.
“Our research highlights the importance of aligning financial incentives with long-term climate goals,” Kanagaretnam said. “If tax incentives are structured effectively – and if companies reinvest those savings into meaningful environmental action – they can help advance both corporate and societal objectives.”
The study contributes to a growing body of research examining how climate awareness influences corporate behaviour and how tax policy can shape sustainability investments.
Professor Kanagaretnam discusses the research findings in further detail on a recent Research @ Schulich podcast.
